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Payment in Chile Regulatory Changes Analysis

Potential Regulatory Changes

The Chilean payment industry is currently undergoing significant regulatory evolution, primarily driven by the implementation of the Fintech Law, adjustments to interchange fees, and the formalization of regulations surrounding cross-border acquiring activities. These changes are poised to reshape the competitive landscape, foster innovation, and influence the operational dynamics across the entire payment value chain.

The Fintech Law and the Open Finance System

The Fintech Law (Law No. 21,521), effective since February 2023, establishes a comprehensive regulatory framework for technology-based financial services in Chile. A cornerstone of this law is the mandate to establish an Open Finance System (OFS), which aims to promote competition, financial inclusion, innovation, and enhance customer and data protection. The OFS will enable the secure exchange of customer financial data between authorized participants with the explicit consent of the customer, primarily through standardized APIs.

Key aspects of the Open Finance System include the regulation of various roles, such as Data Providers, Data Service Providers, Account Service Providers, and crucially for the payment value chain, Payment Initiation Service Providers (PISPs). The implementation of the OFS is phased, with technological preparation and development underway since July 2024, and gradual implementation for banks and credit/debit card issuers expected from July 2026, targeting full operational capacity by 2026 or 2027.

The potential impact of the Fintech Law and the OFS on the payment value chain is substantial. It is expected to drive innovation in payment initiation, particularly through the rise of PISPs facilitating Account-to-Account (A2A) payments that bypass traditional card networks. This could lead to increased competition in the payment acceptance space, potentially lowering costs for merchants. The mandated data sharing through APIs will require significant infrastructure development and updates across the industry, impacting the Processing and Infrastructure & Networks steps. Regulatory bodies like the CMF are actively issuing detailed regulations and supervising the entities operating under this new framework, increasing the compliance burden but also providing clarity for market participants.

For incumbent banks, the OFS necessitates opening their systems via APIs, which could challenge their traditional business models but also present opportunities to develop new data-driven products and services. Fintechs and new entrants, particularly PISPs, stand to benefit significantly from the access to bank infrastructure, enabling them to offer innovative payment solutions. Merchants could benefit from a wider array of potentially lower-cost payment acceptance options, while consumers are expected to gain greater control over their financial data and access to more tailored financial services.

Interchange Fee Caps

In October 2024, mandated reductions in interchange fees for credit and debit card transactions came into effect in Chile. The caps set the interchange fee at 0.8% for credit card payments and 0.35% for debit card transactions, representing significant decreases of approximately 46% and 42% respectively.

These caps primarily impact the economics of card-based payments, particularly within the Acceptance & Wallets and the Issuing steps of the value chain. The reduction in interchange fees is expected to lead to a decrease in the overall Merchant Discount Rate (MDR) charged to merchants by acquirers, making card acceptance more affordable. This directly benefits merchants by lowering their cost of accepting electronic payments.

However, the most significant impact is on issuing banks, as interchange fees represent a key revenue stream for them. The substantial reduction in this income could affect the profitability of their card portfolios and potentially influence their investment in card issuance, reward programs, and other card-related services. Acquirers may see their margins squeezed as they face pressure to pass on the interchange fee reductions to merchants while managing their own costs and the scheme fees charged by card networks. The long-term effect on consumer benefits associated with card usage remains a point to monitor.

Cross-Border Acquiring Regulations

The regulatory stance on cross-border acquiring in Chile has been evolving. Initially, the Central Bank had indicated limitations on fintechs conducting cross-border payment acquiring activities. However, recent regulatory updates are introducing new models, and the CMF has begun authorizing certain Payment Service Providers (PSPs) to undertake cross-border acquiring under transitional provisions. This allows authorized entities to facilitate international transactions for foreign merchants selling to Chilean consumers, with payments processed locally in Chilean Pesos.

This development primarily affects the Payment Acceptance & Wallets and the Clearing & Settlement steps for international transactions. It creates opportunities for authorized PSPs to enter and compete in the cross-border acquiring market, enabling foreign e-commerce businesses to more easily access the Chilean market. For the value chain, this means new flows of transaction data and funds that need to be processed, cleared, and settled, potentially involving the conversion of currency. The Central Bank is also working on initiatives, such as the potential incorporation of the Chilean Peso into international settlement systems like CLS, to mitigate settlement risks associated with cross-border FX transactions.

The impact on players includes new business opportunities for authorized fintechs and PSPs specializing in cross-border payments. Foreign merchants gain easier access to the Chilean consumer base, potentially increasing e-commerce volume. Local merchants may face increased competition from international players. The Central Bank and the CMF will continue to play a crucial role in supervising these activities and ensuring the stability of the payment system in the context of growing international transactions.

Potential Impact of Regulatory Changes

Regulatory Change Value Chain Step Affected Potential Impact Impact on Players
Fintech Law & Open Finance All steps, particularly:
Payment Initiation
Authentication & Authorization
Processing
Acceptance & Wallets
Infrastructure & Networks
Regulation & Oversight		 Increased competition and innovation through PISPs and data sharing.
Promotion of financial inclusion.
Development of new data-driven services.
Enhanced security and data protection requirements.
Need for API infrastructure development.		 Banks: Need to open APIs, potential revenue impact, opportunities for new services.
Fintechs/PSPs: New opportunities as PISPs and data providers, increased compliance burden.
Merchants: Potential for lower costs, new payment options.
Consumers: Greater data control, access to more tailored services.
CMF/Banco Central: Increased oversight and regulation issuance.
Interchange Fee Caps Acceptance & Wallets
Issuing		 Reduced Merchant Discount Rate (MDR) for merchants.
Decreased revenue for card issuers.
Potential pressure on acquirer margins.		 Issuing Banks: Significant revenue impact, potential adjustments to card programs.
Acquirers: Lower interchange costs, pressure on margins, need for differentiation.
Merchants: Lower card acceptance costs.
Consumers: Potential long-term impact on card benefits.
Cross-Border Acquiring Regulations Payment Initiation
Acceptance & Wallets
Clearing & Settlement
Regulation & Oversight		 Easier access for foreign merchants to the Chilean market.
New business opportunities for authorized PSPs.
Need for robust cross-border clearing and settlement mechanisms.		 Fintechs/PSPs: Opportunities in cross-border acquiring.
Foreign Merchants: Easier market entry and payment collection.
Local Merchants: Increased competition from foreign e-commerce.
Central Bank/CMF: Oversight of cross-border flows, ensuring stability.

References

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  • Box III.1 – Setting Final Limits to Card’s Interchange Fees. Banco Central de Chile. https://www.bcentral.cl/.../IEF_II_2023_BOX_III_1.pdf
  • CMF Chile. Regulations on Financial Services Providers in the Fintech Act. https://www.cmfchile.cl/.../w3-article-85488.html
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  • Interchange fees, access pricing and sub-acquirers in payment markets - Bank for International Settlements. https://www.bis.org/publ/work1010.pdf
  • Interchange fees: what they are and how they work - Adyen. https://www.adyen.com/global-payment-processing/interchange-fees