Payments Regulation In Latin America Responds To Changing Habits

March 26, 2025
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Regulators in Brazil, Mexico and Argentina are changing tack as consumers shift their choice of payment methods away from cash and into other areas.

Regulators in Brazil, Mexico and Argentina are changing tack as consumers shift their choice of payment methods away from cash and into other areas.

Cash has traditionally been king in Latin America, the payment method of choice for merchants and consumers alike. 

However, this is changing rapidly: a report by McKinsey published in 2024 showed that debit replaced cash as the most used form of payment among 15,000 people in Spanish-speaking countries in the region from 2021 to 2023. 

Respondents suggested that although they still use cash widely, they would prefer to use credit, debit or mobile payments, given the choice. 

As a result of this trend, fintechs and payment operators across the region are growing in prominence and stature, improving the efficiency and reliability of payments networks both domestically and across borders. 

Governments and regulators are responding by updating payments regulation to address new challenges thrown up by the changing habits and to ensure that consumers are protected.

Brazil 

Pix

The main payment update in the only Portuguese speaking country in the region is Pix, the central bank-operated instant payments system that launched in 2020. 

Since inception, the system has been under constant evolution as a result of its fast take-up, and now handles more than BRL2trn (US$345bn) in payments monthly

The system has quickly become Brazil’s preferred method of payment, surpassing debit and credit and rendering cash almost obsolete. 

New functions such as Automatic Pix and Scheduled Pix mean the system is constantly evolving and quickly becoming an integral part of the payments scene in the country. 

Most recently, the Central Bank of Brazil (BCB) introduced new security measures for the system aimed at preventing fraud and enhancing compliance, introducing know your customer (KYC) protocols that mean users data must match that on the official federal database. 

Other changes in February introduced rules for refunds, withdrawals and transactions.

Changes are happening at a rapid pace because of the usage rates, so firms must be mindful of the evolving environment

Open finance environment 

Alongside the National Money Council, the BCB also established an open finance scheme that looks to encourage the sharing of data, products and services between its regulated payments institutions, at the discretion of the customer. 

The goal of the initiative is to encourage efficiency in the credit and payments markets with inclusivity and competition, with actions such as contactless payments and digital wallet access. 

Regulatory oversight of open finance includes extending existing rules to foreign entries operating in the country and those handling foreign exchange. 

Changes are made using a regulatory driven model that enacts agreements on standards, procedures, safety protocols and certificates. 

BCB Circular No. 4,015/2020 established the scope of data and services of open finance, with a deliberative council, secretariat and technical groups comprising the open finance governance structure. 

This initiative was established alongside Pix, but has yet to gain as much ground as the payments system.

However, given Pix’s success over time, more financial services and payments companies will likely look to introduce open banking technologies and software into the Brazilian payments system. 

Mexico 

CNBV fraud regulations

In June 2024, the Comisión Nacional Bancaria y de Valores (CNBV), the main financial regulator in Mexico, introduced a widescale set of regulations governing credit institutions with the wider intention of preventing fraud. 

The goal of the regulations is to provide an updated mandate to banks and fintechs and help them establish fraud management tools and authentication protocols using prevention plans. 

The ruleset was a response to growing payment fraud in the country and aims to ensure that financial organisations take responsibility. 

One of the key facets is that firms must have stringent fraud management plans that are submitted to the CNBV. 

The rule requires credit institutions to find ways to stop fraudsters from impersonating customers or companies and imitating personal information. 

Fintech law updates

Mexico’s fintech laws were pioneering for the region when they were first introduced in 2018, when it was only the seventh jurisdiction in the world to regulate the sector.

However, seven years on, the country’s regulatory framework has been criticised as lagging behind those of its neighbours. 

Of the close to 500 firms that were identified under the Financial Technology Institutions Law (LITF), 201 were regulated, and of the 90 that have since applied to the charter, only 40 have been approved. 

Sources suggest that the implementation of the CNBV’s laws came too slowly and has hindered firms in the country. 

Open banking laws were similarly promised after the 2018 law paved the way for firms to develop standardised APIs for data sharing, but have yet to materialise. 

Dinero Móvil

Dinero Móvil (DiMo) is a payments service similar to Brazil’s Pix that was issued in 2023 to replace Cobra Digital (CoDi). 

DiMo, which means mobile money in English, is an attempt to allow Mexicans to spend money simply using their mobile phone numbers using a provider such as banks BBVA and Santander.

In 2024, it was reported that the service had 11m users, a significant growth on the year before.

The central bank hopes DiMo will promote greater reliance on digital payments and edge the country closer to the end of cash. 

If successful, DiMo could prove a game-changer for the Mexican payments industry, with marketing around the service suggesting it is benefiting the unbanked in the country with its easy-to-use interface and system. 

Argentina 

Economic stabilisation

For many years, Argentina has struggled to overcome crippling debt with the International Monetary Fund (IMF) and high-level corruption among its political class. 

Embroiled in a cycle where the state borrows from the IMF to refinance its existing debt, the situation has meant the economy of what could otherwise be South America’s most prosperous country has long faltered, and its payment system has suffered as a result. 

For many years there has been a dual (or even triple) exchange rate in the country, as a black-market rate sprung up for those able to exchange dollars for pesos in cash, which garnered a significant profit on the dollar than the official exchange rate offered by banks. 

It was illegal for Argentine nationals to bring dollars into the country to fuel the black market. At times, using a third approach such as a foreign exchange company such as Western Union would allow for even greater rates based on the haircut price of the country’s bond price. 

As a result, cash has long been king, as getting these better rates is impossible using a digital method. 

However, the recently installed government led by President Javier Milei has attempted to rejuvenate the system and move away from black market financial payments economics. 

During his campaign, Milei suggested the country switch currencies and adopt the dollar like Ecuador or Panama, although this has not happened as yet. 

Electronic payments in US dollars

The new administration has introduced several initiatives to try to help modernise payments and stabilise the economy and the financial system. 

For example, the Central Bank of the Argentine Republic (BCRA) has approved a new set of regulations to allow consumers to choose which currency they use to make electronic payments, effectively allowing them to select US dollars and sidestep the black market. 

The rule mandated those providing payment services to develop and implement these capabilities by February 28, 2025. 

The system means there is no exchange transaction, which should help to drive down the significant levels of inflation the country has experienced for several years. 

Other initiatives in the country include changes to rules governing foreign exchange controls and inflows into the country and removing taxes on foreign currency purchases.

If these attempts work and the country’s 47m people are able to operate and make payments within a trustworthy economy without fear of inflation, it will open up a huge amount of opportunity for fintech and payments companies operating there. 

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