Raidiam’s Product Manager, Christian Eloysio, explores Contactless Pix and how this recently launched innovation is transforming the user experience for Open Finance payments in Brazil. Developed in close cooperation with ecosystem partners, including Raidiam, this new capability, enabled by the Enrollments API, reduces friction and leverages the scale of Pix to make Open Finance payments as seamless as card transactions.
Payments have become a fundamental pillar of Open Finance ecosystems worldwide. While Open Finance traditionally begins with data-sharing capabilities - giving users control over their financial data - the integration of payments introduces immediate, tangible benefits that drive adoption. Nowhere is this more evident than in Brazil, where Open Finance is evolving rapidly, and new innovations are enhancing the payments experience.
Why Payments Matter in Open Finance
One of the key challenges in Open Finance adoption is engagement. While giving users control over their data is crucial for data rights, fair competition, and regulatory compliance, it does not always provide an immediate benefit. Users often share their data and then wait for something to happen, leading to slower adoption rates.
In response, Open Finance Brasil has not only introduced three different Payment APIs, each with multiple features and payment flows, but has also invested in enhancing the user experience for payment initiation.
The security model for Open Finance payments is based on the Financial Grade API (FAPI) standard, which Raidiam has been deeply involved in developing. This specification is built on OAuth 2.0 and uses the Authorisation Code Grant for user access control.
In this process, users must be redirected to authorise the payment initiation. While this guarantees security and interoperability, it forces users to be redirected every time they want to make a payment, which introduces friction. As a result, many users prefer traditional methods like credit cards over Open Finance payments.
To address this issue, new methods of balancing security and adoption have been implemented globally. One example is Variable Recurring Payments (VRP), already adopted in the UK Open Banking ecosystem. VRP allows users to authorise payments once, generating a reusable token that eliminates the need for repeated redirections – making Open Finance payments as seamless as traditional card transactions.
Now, Open Finance Brasil is taking this concept even further with the introduction of Contactless Pix.
Contactless Pix is enabled by the Enrollments API and introduces a more user-friendly flow for payment by allowing users to enrol their devices - such as smartphones - with their bank. Instead of requiring multiple authorisations, the cryptographic keys from the enrolled device are used to perform additional checks by the Account Servicing Payment Service Provider (ASPSP). This adds an extra layer of fraud prevention while significantly reducing friction.
By eliminating the need for constant redirection, this approach provides a more seamless payment experience while maintaining security and regulatory compliance. This innovation has the potential to revolutionise the payments landscape, particularly in Brazil.
Brazil’s instant payment system, Pix, has already transformed the country’s payment landscape. In major urban centres, cash transactions have almost disappeared, with most payments now made via credit cards or Pix. Since its launch in November 2020 by the Central Bank of Brazil, Pix has seen unprecedented adoption:
However, despite its success, the Pix payment flow - before the introduction of Contactless Pix - involves multiple manual steps, comprising:
This process usually involves 5 to 10 steps. The introduction of Contactless Pix streamlines this by enabling:
With these improvements, Open Finance Brasil is set to drive Pix adoption even further, reducing friction and enhancing the user experience.
One of the most challenging aspects of Open Finance development is setting up the initial infrastructure that establishes trust in the ecosystem. While a common Trust Framework can significantly facilitate this process, once the initial structure is correctly in place, the cost of introducing new products to the ecosystem represents a relatively low marginal cost.
In this sense, once data-sharing capabilities are established, adding new services - such as payments - becomes a matter of developing the APIs themselves, as the trust layer within the ecosystem is already in place.
Raidiam has been a key partner of Open Finance Brasil from the start, ensuring a secure, interoperable, and scalable ecosystem. Our contributions to its success include:
A successful Open Finance ecosystem requires a robust Trust Framework to establish security and interoperability. Raidiam Connect provides the core Directory and Trust Framework technology that acts as the foundation that enables banks, fintechs, and payment providers to operate seamlessly.
The Trust Framework also solved the ecosystem’s trust challenges and enables new products to be introduced at a low marginal cost.
Our Raidiam Assure platform ensures all participants meet regulatory and security requirements before launching new APIs. This includes:
With Contactless Pix, Open Finance Brasil is setting a new standard for seamless, secure payments. By reducing friction, enhancing security, and leveraging the power of Pix, this initiative is poised to drive mass adoption of Open Finance payments.
Raidiam is proud to play a pivotal role in this journey, ensuring that Open Finance Brasil remains a global leader in financial innovation. As we continue to support new product launches, we look forward to the next wave of advancements that will further revolutionise the country’s financial ecosystem.
Want to learn more about how Raidiam is shaping the future of Open Finance in Brazil and beyond? Get in touch today.