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Revolutionizing Instant Payments in Colombia: A New Chapter Beyond Brazil's PIX Model

Colombia is on the brink of a financial revolution, embarking on an era of instant payments that promises to redefine its banking landscape. This transformation, driven by new interoperability regulations, aims to enhance financial inclusion across the nation. However, this isn't merely a replication of Brazil's acclaimed PIX system. Instead, Colombia is charting its own course.





The Colombian financial arena is witnessing a significant shift with the introduction of the new interoperability regulation, which seeks to bridge the gap in financial services accessibility. Unlike Brazil's PIX, where a new system was developed from scratch, Colombia is leveraging its existing financial infrastructure. By connecting these systems through the central bank, Colombia is laying down the groundwork for a more inclusive financial ecosystem.


Colombia's strategic approach differs from Brazil's centralized system. While the Colombian model might entail slower transaction speeds and higher operational costs, it offers a smoother transition for existing financial institutions, allowing them to gradually adapt to the new landscape.


The landscape of instant payment methods in Latin America has seen a dramatic surge, led by Brazil's PIX and Mexico's CoDi. Despite this growth, a significant portion of transactions in the region are still cash-based. In Colombia, where a substantial segment of the population remains unbanked, the government has prioritized financial inclusion. The goal is to make digital payments more accessible, secure, and economical.


In a landmark move, the Banco de la República, Colombia's central bank, issued Resolución Externa 6. This regulation establishes the first framework for low-value payment interoperability, forming the foundation for Colombia's Single Payment Interface (SPI). This initiative marks a departure from the existing 'walled garden' approach of Colombian financial institutions, promoting a more interconnected financial environment.


Federico Suarez Rendon, a senior vice-president at Open Banking Exchange, highlights the significance of this development. He notes that the majority of the Colombian market, dominated by three major banks, has been slow to adopt digital card payments. The new regulation by the central bank aims to disrupt this status quo, fostering a more competitive and inclusive payment system.


Jonathan Malagón, president of Asobancaria, echoes this sentiment. He underscores the importance of an updated regulatory framework for instant payments, emphasizing its potential to enhance financial inclusion through accessibility, interoperability, and cost-effectiveness.


Colombia's approach is distinct from Brazil's PIX, which was entirely centralized. Instead, Colombia's model integrates existing payment initiatives like TransfiYa and Entrecuentas with the central bank's new framework. This synergy is expected to complement and strengthen the existing payment landscape.


ACI Worldwide, a prominent player in global payment systems, has partnered with the Colombian central bank to implement a centralized alias directory. This collaboration is set to culminate in the project's launch in 2025. ACI Worldwide's experience in powering numerous real-time payment schemes globally positions it as a key contributor to Colombia's instant payment ambitions.


The SPI, under the stewardship of the central bank, will offer a uniform user experience akin to Brazil's PIX or India's Unified Payments Interface. While the system is poised to offer numerous benefits, challenges inherent in the 'sandwich' model—combining old and new infrastructures—cannot be overlooked.


Colombia's journey towards an inclusive, efficient instant payment system reflects a balance between innovation and pragmatism. It's a path characterized by gradual adaptation, complex integration, and the pursuit of universal access. This initiative not only signals a shift in Colombia's financial landscape but also serves as a case study in the dynamic and evolving world of global payment systems.


Source: The Banker, Amalia Illgner, Loan Analytics

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