Kicked off alongside the third phase of Open Finance in October 2021, Payment Transaction Initiation (ITP) took its first steps last year, with the first authorized institutions and the market beginning to grasp the specifics and potential of initiation.

For comparison, only 16 institutions have so far been authorized by the Brazilian Central Bank to offer initiation services. To be a participant in the Pix scheme, that number is over 700. The reason: becoming an ITP carries regulatory, technological, and product complexities that take time and study to get right. Even so, 2022 was an important bridge to what's coming. We've already seen interesting use cases like Mercado Pago's.

What to expect for Payment Initiation in 2023?

A recently released report from OBE, in partnership with the University of Oxford, points out that Brazil has the conditions to overtake the United Kingdom — the ecosystem's pioneer — and become the world leader in Open Banking adoption. That impressive indicator also runs through ITP, the most anticipated service of Open Finance's third phase in Brazil. Thanks to its ease of use and focus on user experience, ITP is likely to win over Brazilians the way Pix did. We estimate that this year ITP will hit 20% of all transactions in the Pix scheme, surpassing 6 million transactions.

ITP is on the Brazilian Central Bank's priority list — proof of that came in December, when the regulator expanded initiator activity to credit fintechs. As institutions adjust to BCB regulation, people will naturally incorporate ITP into their purchase flows.

On the technical evolution front, we can expect 3 important steps for initiation:

1. "No redirect" flow: no need to redirect the user to the account holder for authentication.
2. Batch payments: transactions from "N accounts" to "N accounts".
3. Recurrence 2.0 (VRP — Variable Recurring Payments): recurring transactions with a pre-consented maximum amount, like automatic energy bill payments.

How to become a Payment Initiator

To offer Payment Initiation, a company must either be authorized by the Brazilian Central Bank — if using its own license — or adopt the sub-initiator model (initiation as a service). Either way, the Iniciador Platform can support your business on the technology side.

We are Payment Initiation (ITP) specialists. Our platform has OpenID Foundation–certified technology and complies with Brazilian Central Bank regulations, the Pix scheme rules, and the Open Finance Directory rules.

Want to know more? Talk to us.

This text contains excerpts from the interview given to the Lets Open Mega Report 2022.*