In general the climate towards FinTech Payment Services entities has been increasingly positive. Given the fact that Law 20,950 requires these entities to comply with certain standards provided by the Central Bank of Chile (please see below), the financial community has seen its main concern – the lack of financial soundness of the services providers – duly covered, at this stage. Several new entities are in the process of obtaining applicable licenses in order to enter the payment services market.
Law 20,950 was enacted allowing companies – other than banks – to function as issuers and operators of payment services with funds handling. Said companies must be incorporated as special purposed open stock corporations and shall comply with the requirements set forth by the Chilean Central Bank (with regards to paid-in capital, minimum reserves, liquidity, risk management and control, among other matters).
However, if the scope of the services extends to banking activities (i.e. accepting money from the general public on a recurring basis) the entity shall establish itself in Chile as a formal bank or financial institution, also under the oversight of the CMF (which as of June 2019 has merged with the former Superintendency of Banks and Financial Institutions) and shall fulfill general banking requirements.
The scope of the services should be carefully analyzed on a case by case basis in order to assess any potential risks relating to compliance with consumer protection, data privacy and other laws generally applicable to service providers.
In 2018, Finnovista and the Interamiercan Development Bank Identified 1,166 Fintech new businesses in LatinAmerica and the Caribbean, out of which 84 (7,2%) are Chilean (BID & Finnovista, 2018).1
1 BID & Finnovista. (2018). Fintech. América Latina 2018: Crecimiento y consolidación. doi:http://dx.doi.org/10.18235/0001377.-
Rodrigo De Alencar