More fluid FX transactions are one of the conveniences of FX as a Service. Learn more about the advances in digital FX transactions in Brazil.
Transformations in technology and regulatory environment are the backdrop for the emergence of FX as a Service. First, we must understand the business model Software as a Service (SaaS) used in various market niches, which represents a change in the systems acquisition model and has been largely adopted by companies in the financial sector, especially fintechs. In the technology acquisition model via SaaS, the entry barriers and initial costs are low because your company does not have to “buy” the system, but rather adopt recurring use of the software “as a service.” Integration is simplified and all infrastructure and maintenance for the software are the responsibility of the supplier company, via cloud-based technology.
At the regulatory level, we know that Brazil’s entire financial sector is undergoing transformations, which of course would be no different for foreign exchange. This movement is driven by the Agenda BC#, which is a proposal of the Central Bank of Brazil (BCB) that includes modernizing regulations and innovating processes between institutions (financial or non-financial) to stimulate competitiveness and financial inclusion in the Brazilian market. At the end of 2021, the New Foreign Exchange Legal Framework was approved. With it, new alternatives will emerge for financial institutions and their customers, which will optimize costs, time, transparency and access.
And FX as a Service emerges within this context. Like SaaS services, CaaS is a solution via API (Application Programming Interface) that enables companies and individuals to carry out foreign exchange transactions fluidly, without obstacles. The solution guarantees agile settlement of FX transactions by digitalizing the process, which can be integrated with the journey of different platforms that want to offer FX in their ecosystem, either as the main service or as a subsidiary service required for their main offering. Keep reading to discover how Bexs Banco uses this technology to simplify access to FX transactions in different verticals, such as e-commerce, investing, international trade and AgroTechs.
The modernization of foreign exchange transactions is linked to software that, for example, is developed by Bexs Banco, which, as a foreign exchange bank, is responsible for developing the operational interface for contracting this service, hosts the solution on its servers and ensures observance of all regulatory requirements and the security needed for FX transactions.
The innovation arrived first for Brazilian e-shoppers interested in buying products on international marketplaces. By using local payment methods, such as boletos and local credit cards, with an FX solution integrated with payment providers, Brazilians can shop on leading global marketplaces in their local currency, the Brazilian real. More recently, integrations evolved to the API model, and new local payment methods, such as Pix, were incorporated. This segment of international online shopping is called cross-border e-commerce. In 2021, the cross-border segment registered sales of R$36.2 billion, representing growth of 60% from 2020, which significantly outpaced the growth of 27% in the local e-commerce market (NielsenIQ Ebit).
Then came the time of international investing, when an FX solution via API developed by Bexs was integrated into the investment platform of the U.S. brokerage Avenue Securities. The partnership enabled Brazilians to invest on U.S. stock exchanges using their smartphones. In the process, investors initially make transfers in Brazilian real and then conduct the FX transaction digitally. With the resulting balance available in U.S. dollar, customers can then invest in hundreds of financial products in the United States, including on the Nasdaq and NYSE The investment platform also started to offer in its portfolio an offshore current account and cryptocurrencies.
The Open Solo platform is a hub of services related to the trade journey of the wheat and fruits, legumes & vegetables (FLV) chains. In partnership with Bexs Banco, agrotech offers international transactions and enables their payment via FX services, which includes the price quote and settlement phases. Therefore, a foreign trade transaction that traditionally would require various actions and contacts via e-mail or telephone with FX operators and other parties involved in the contracting, now can have the FX settlement phase concluded in minutes.
The information shared between the buyers and sellers that trade on Open Solo is the data required to initiate the FX transaction. By integrating the Bexs Banco’s API with the platform, compiling the required date and closing the FX rate can be carried out in the same place.
In practice, the FX engine of agrotechs enables importers and exporters to contract FX fluidly and securely, mitigating FX risks and increasing their access to the market, with their data protected.
In 2021, the Central Bank of Brazil presented certain changes to the foreign exchange market. Institutions other than banks can participate in the FX market, and some measures already have ensured simpler processes for carrying out FX transactions. The expectation for 2022 is for the advances to gain even greater traction, with the publication, in the closing days of 2021, of the law known as the New Foreign Exchange Legal Framework, which revoked the rules of past century that were still in force.
The measures disclosed in 2021 include creating the figure of eFX service provider. This new figure substitutes the international payment facilitator in the intermediation of payments of goods and services that involve a foreign party.
Any fintech, agtech or e-commerce that operates as an eFX service provider can intermediate payment operations involving various services and products exchanged between Brazil and the world, in both directions. They will need an authorized financial institution to formalize this operation, such as an FX bank, but this intermediation enriches the range of financial services offered to clients.
Contact us and schedule a meeting with our team of specialists to learn about our solution FX As A Service, By Design solution services, financial exchange transactions and foreign exchange for import and export payments.