Open Finance is an ecosystem, created by the Central Bank of Brazil, to allow customers to share their registration, financial and transactional data, as well as carry out payment transactions from different platforms, all as and when they want.
With these mechanisms, it is possible for the customer to start a relationship with any institution from scratch, assuming leadership and control over their own data and the operations they carry out.
Open Finance allows users to share information about their financial life, according to the their interests and with consent, with specific purposes and determined deadlines, and also carry out payment transactions in an easier and faster way.
The tool has been seen as another solution in the sports betting and online gaming segment to ensure security, both for operators and customers, and transparency for regulatory entities.
Money laundering and fraud are the main problems highlighted in the sports betting market due to the difficulty in proving the identity of the individual who makes the games.
But a solution that has been built by the financial system can be an ally in improving security for both those who manage bets and consumers: Open Finance.
Fraudulent schemes find their way into payments: whoever is going to bet must deposit the money into the bookmaker's account. When receiving any prize, the bettor needs to register their bank account to have access to the amounts.
According to Ordinance No. 615, published on April 18 and which is part of the sector's new regulation, any payment in the betting environment can only be made using Pix, TED, debit or prepaid cards - today it is possible to pay with slips, cards credit, cryptoactives, among others. The new payment rules come into force in October this year.
It is in this sense that Open Finance can help, in the assessment of Lígia Novazzi, COO of Teros, a company that provides technology to the data sharing ecosystem.
“By making transactions with Pix, within the scope of Open Finance, we will be able to rule out the chances of fraud. This happens because operations via Open Finance allow bettors to move resources only from accounts with their CPF, in addition to facilitating the traceability of the process,” says the executive in an exclusive interview with InfoMoney.
The guarantee of the identity mentioned by Novazzi is possible thanks to so-called payment initiators, authorized to operate in phase 3 of Open Finance.
They are companies regulated by the Central Bank responsible for initiating a payment or transfer via Pix outside the bank's internet banking.
By regulation, if the company is only a payment initiator, it does not hold the paying customer's financial account, nor does it participate in financial settlement. Therefore, it does not “touch” the money that it transfers from one point to another.
When using the launcher, the user gives consent for the platform to redirect them to the customer's bank, so that they can make the payment and/or transfer directly from the logged in environment and then be redirected back to the app they are using – like a betting one, for example.
The initiator allows transactions to only occur with the consent of the bettor, who will only use resources from accounts in his CPF – which prevents one person from playing on behalf of another, for example. This can combat fraud and ensure that minors do not gamble.
Victor Duek, director of Iniciador, a company specialized in technology for Open Finance, states that the demand for initiators has been growing in recent months precisely because they offer more transparency. According to data from the Central Bank, transactions with initiators rose 60% in the last six months, reaching 475.3 thousand in March.
And there is no shortage of demand: Brazil is the third country with the highest gross revenue from betting in the world, according to a recent study carried out by the International Betting Integrity Association (IBIA), H2 Gambling Capital and the Brazilian Institute of Responsible Gaming (IBJR).
Furthermore, both payment initiators within the scope of Open Finance and the institutions that offer Pix are regulated by the Central Bank, which offers better monitoring of transactions.
“Without regulation, the market is more exposed to money laundering. The origin of the amounts is unclear: any person or account can make deposits and withdraw amounts without proving that they placed a bet. Regulation and additionally Open Finance will raise the quality level of the sector,” says Novazzi.
Open Finance is an option, but regulation is robust
The Open Finance ecosystem can expand the security layer options for bookmakers, but it is not the only solution. Experts understand that regulation itself has already been designed to improve the sensitive points already mapped by the market, considering that Brazil is one of the countries that bets the most in the world and until now it did not have regulation, which brought insecurity for everyone.
For Camila Caresi, director of risk and compliance at Pay4Fun, a betting payment platform, Open Finance can bring extra security, but this additional layer will be built with products – that is, bookmakers need to buy solutions to add the initiator payment to your environment.
“It’s a possibility, but just the fact that regulation restricts payment methods already raises the level of protection. It is possible to do Pix via Open Finance and Pix directly – both are possible,” she highlights. What changes is the customer experience: outside of Open Finance, Pix uses the copy and paste feature.
Jun Makuta, partner in the gaming & eSports area at Tozzinifreire Advogados, agrees that Open Finance can help the sector, but highlights the role of the Ministry of Finance in relation to the smoothness of payments.
“The regulation is positive in that the ministry will supervise betting houses with objective rules in relation to payment methods, which helps to prevent money laundering – restricting deposit and withdrawal options, for example,” states the attorney.
According to him, 90% of bookmaker operations are already carried out via Pix. “Since Pix is a Brazilian product, only Brazilian institutions offer it, which requires bookmakers to form partnerships here and buy products to operate their payment services here. Added to this, the CNPJ will also need to be local, according to the regulation approved in December,” says Makuta.
“The weakest link in the chain is always the consumer. This ordinance and all regulations come to shield you from some situations – which should make the market safer and more profitable in the long term,” adds Caresi, from Pay4Fun. The IBJR study estimates that the sports betting business volume in Brazil will reach around US$34 billion by 2028, following the regulation of the segment.
To cope with this market size, it is a fact that the new regulation will bring some challenges to companies in the segment.
“An adaptation period already foreseen by regulation will be necessary, of around six months. And it will be crucial to have good partners to offer payments intermediated by institutions authorized by the BC to comply with regulations – Open Finance offers this, but it is already the level of requirement of Ordinance 615 itself, which is great for the consumer,” highlights Caresi.
Duek states that the consumer will not need to know what Open Finance is to place a sports bet. “The bettor will make use of the ecosystem by using a bookmaker he trusts. They will have easier access to the journey, without needing to rationalize that Open Finance is providing that experience. Being involved in betting is another way to bring consumers closer and consolidate the ecosystem as a business in Brazil,” says the executive.
One way or another, the bettor will win, says Plínio Lemos Jorge, president of ANJL – National Association of Games and Lotteries. “With clear payment rules, players will feel safer and more comfortable on authorized platforms. Players in the illegal market will not have any of these guarantees,” he says.
Source: InfoMoney
