Competition, Fintechs and Open Banking – Esteban Greco – 2024 LACCF

This presentation by Esteban Greco (Economist and Professor at University of Buenos Aires, Argentina) was made during a discussion on Competition, Fintechs and Open Banking held during the 2024 OECD-IDB Latin American and Caribbean Competition Forum in the Dominican Republic on 9-10 October 2024. More materials and information can be found at https://oe.cd/laccf24.

This presentation was uploaded with the author’s consent.

1. Restricted Use - À usage restreint
The role of LAC Agencies promoting
competition in Fintech markets de
competencia.
Recent trends and cases
Session 1. Competition, Fintechs and Open Banking
Esteban Greco
8-10 October 2024
Latin Amercican and Caribbean Competition Forum
Santo Domingo, República Dominicana

2. Restricted Use - À usage restreint
Cases taxonomy : 3 categories consistent with technological
and digital evolution
1.Investigations involving incumbent financial institutions (banks, acquirers, processors): cases
where incumbents were investigated for exclusionary practices against new players
2.Antitrust cases against card schemes: specific LAC cases where Fintechs processing locally
payments to international merchants, complaint against card schemes for exclusionary
practices.
3.Antitrust cases against Big Techs: cases about In App Payments against Google and Apple,
similar to cases in US and Europe (Epic and Spotify cases) but with singularities in the region

3. Restricted Use - À usage restreint
1. Investigations involving incumbent financial institutions
CNDC-Argentina CADE-Brasil FNE/TDLC-Chile SIC-Colombia COFECE-México Indecopi-Perú CONACOM -
Paraguay
2016
Market investigation of
electronic means of
payment and ex officio
investigation against sole
acquirer of Visa (Prisma)
and 14 banks
2017
Structural and behavioral
commitment by the
defendants
2019
Divestment of banks 51%
stake in Prisma
Multi-acquiring
2022
Divestment 49% Prisma
2023
Complaint against MODO
and the banks
2024
MODO complaint vs.
Mercado Libre and
Mercado Pago
Mercado Libre/Mercado
Pago complaint vs. MODO
and banks
2017
CADE vs. Elo, Alelo, Amex,
Hipercard, Ticket, Banco do
Brasil, Bradesco, Itaú-
Unibanco. Commitment to
cease and remedy of
access/interoperability due
to exclusivities and refusal to
contract.
2018
CADE vs. Banco do Brasil,
Bradesco, Itaú-Unibanco.
Commitment to cease and
behavioral remedies for
discrimination, refusal to
deal and tying.
2020
Guiabolso vs. Bradesco.
Commitment to cease and
payment a fine by Bradesco
for market foreclosure
through restrictions to
access bank information.
2023
Investigation of anti-
competitive practices in the
financial and payment
instrument markets. Analysis
of the effects of vertical
integration. Requested by
the Federal Senate.
2013
FNE requests
regulatory changes
to promote
competition in
credit card acquiring
2017
TDLC issues
recommendation
promoting
competition and
change of model
2019
Supreme Court
ruling endorsing
greater competition
and change of
model
2021
Report of the FNE
requesting the TDLC
the transitional
regulation. Law on
the regulation of
interchange fees.
2021
SIC issues
recommendation
s on access and
interchange fees
Decree limits
vertical
integration.
2017
Opinion on the
Fintech Bill
2020-2023
COFECE Identifies
barriers to
competition in the
card payment
processing market.
Recommendations
for interoperability,
non coordinated
interchange fees
2022
Recommendations
to promote
competition in the
Financial
Technology
Institutions sector.
Market study for
digital financial
services.
2018
Market study to
analyse the
conditions of
competition in
payment card
systems
2021
Report and
recommendations on
card payment
services
2022
Report on the market
for payment
acceptance services
to foreign merchants
2023
Market study of the
Fintech sector.
2023
Banco Continental
and BEPSA vs.
Bancard (owned by
main banks)
The Board issues an
interim measure
against Bancard.
The Board sanctions
Bancard for abuse of
dominant position
for exclusive dealing.

4. Restricted Use - À usage restreint
Type 1 cases regularities
▪Vertical integration and the behaviors of incumbents restricting the entry and expansion of
disruptive digital players: Vertical integration of card payment acquirers and processors with
incumbent groups of banks.
▪Challenges to relevant market definitions understanding business models: cases in the region
shows different multiple markets definitions (different of Amex US case)
▪Main theories of harm: refusal to deal/access restriction, exclusivities
▪The case of Guiabolso-Bradesco and Mercado Libre-Modo involve new unbundled services by
digital players, such as open banking services for the organization of banking information
(similar to the Account Information Services of European regulations -PSD2-)

5. Restricted Use - À usage restreint
Cases characteristics
Traditional payment
system
Open banking style. Fintech as
Third-Party Payment provider
using bank accounts
Open banking style. Fintech as
Third-Party Payment provider
using digital wallet
Europe: interchange fee and third-party
access to incumbents' payment
infrastructure regulation (Reg. (EU) 2015/751)
Vertical integration Multiple Banks ownership
Europe: PSD2 (Dir. (EU) 2015/2366 )
Open banking: access to bank account information
Payment Initiation Services (PIS): third-party payment providers
Interchange fee coordinated fixing/acquirers
margin squeeze
Access to bank account information and payment infrastructure

6. Restricted Use - À usage restreint
2. Antitrust cases against card schemes. Local payment
processing for international digital services
Traditional payment
system for
international services
Local payment
processing by Fintechs
•High fees for international services
•Block international transactions
•The rule and programs harm regional Fintechs that provide local processing services for international services
(Netflix, Spotify, etc.)

7. Restricted Use - À usage restreint
2. Antitrust cases againstcardschemes
Country Year Agencies actions
Argentina2023Private enforcement. 2 judicial interim measures against Visa that force the
operation to be maintained and prevent contractual termination and fines for
processing payments of international digital services.
CNDC. Interim measure against Visa
Chile 2022The TDLC adopts an interim measure ordering Visa to continue providing,
under the same conditions, the services so that the complainant can continue
operating.
Colombia 2022Interim Measure of the SIC that prevents VISA and Mastercard from
implementing the EMLP and PIFO programs and forces them to suspend
communications and threats against acquirers with which they intend to
prevent them from continuing to contract with companies that provide local
transaction services for the acquisition of international digital content
2023Opening of investigation and statement of objections against VISA and
Mastercard
Paraguay 2023CONACOM granted an interim measure against Visa International in the
framework of the investigation initiated against the company
Perú 2023INDECOPI initiates sanctioning proceedings against Visa for alleged abuse of
dominant position (INDECOPI, 2023a).
INDECOPI ordered an interim measure against Visa.
República
Dominicana
2023PRO-COMPETENCIA orders precautionary measure and initiation of
investigation proceedings against Visa for alleged abuse of dominant position
LAC interim measures in type 2 cases

8. Restricted Use - À usage restreint
3. Cases against Big Techs
Country Year Case Conducts similar t international
App Stores payment processing
cases (Epic vs. Apple and
Google, Spotify vs. Apple)
Specific regional
conduct
Brasil 2022 Mercado Libre vs. Apple •Obligation to use platform’s In
App Purchase (IAP) payment
processing
•Anti-steering provisions:
Impossibility for a developer to
notify their customer that
there is another way to acquire
that digital good with lower
cost
Prohibition of offering
third-party digital
services in their own
apps
Chile 2022 Natural person vs. Google y Apple
México 2022 Mercado Libre vs. Apple Prohibition of offering
third-party digital
services in their own
apps
2022 Natural person vs. Google y Apple

9. Restricted Use - À usage restreint
Conclusions
▪Fintech, particularly in payment markets, has been one of the main sources of digital economy
cases and intervention for LAC competition agencies.
▪The role of the LAC competition agencies has been significant in eliminating barriers to Fihtechs
and promoting competition in financial markets, allowing innovative products and financial
inclusion
❑Consistently with what Europe promoted through regulatory measures as interchange fee regulation
and Open Banking Payment Service Directive (PSD2)
❑Achieving innovative services in international comparison
▪"To date, few digital wallets or other potential fintech debit networks have incorporated these new
real-time payments networks” (DOJ complaint against Visa, September 24
th
, 2024)