Pix: Brazil's Payment Pulse
UPI… FedNow…
The instant payments of India and the United States which most of us are aware of!
But wait — something is missing from this lineup, right?
Any guesses what it would be?
Drumroll, please…
It’s none other than Pix, Brazil’s instant payment system.
Vamos aprofundar e explorar mais sobre o Pix! (Let’s dive deeper and explore more about Pix!)
Pix
Pix — Instant payment system developed by the Central Bank of Brazil. Launched in November 2020, it enables users to send and receive money 24/7 without the need for traditional banking hours. Users can link their bank accounts to the system and make payments using QR codes, phone numbers, or unique identifiers called “Pix keys/Aliases”.
Reason for Pix’s Origin:
Pix payment originated as a direct response to the inefficiencies and limitations of traditional banking systems [TED- Transferência Eletrônica Disponível, DOC — Documento de Crédito and Boletos (bank slips)] in Brazil.
The Central Bank of Brazil recognized the need for a more modern, efficient, and inclusive payment system that could meet the evolving needs of its citizens and businesses. The factors that led to its creation are:
- Inefficiencies in traditional banking: Slow transaction times, high fees, and limited accessibility hindered economic activity.
- Advancements in technology: Mobile banking, QR codes, and real-time payment technology offered potential solutions.
- Government initiatives: The Brazilian government sought to increase financial inclusion and promote digital transformation.
In response to these factors, the Central Bank of Brazil took the initiative to develop Pix, payment system that could address the shortcomings of traditional banking and leverage the latest technological advancements. By working closely with banks, fintechs, and other financial institutions, the Central Bank was able to create a system that is both user-friendly and efficient.
Pix Transaction
1. Transaction Type Supported
Pix can be leveraged by individuals, businesses, government agencies, etc and it supports transaction types such as:
- Person-to-Person (P2P)
- Person-to-Business (P2B)
- Business-to-Business (B2B)
- Person-to-Government (P2G)
- Business-to-Government (B2G)
2. Pix Payment Working
- Registration: Users need to register for Pix through their bank or financial institution. During this process, they link their account to a unique identifier called a “Pix key/aliases.” This key can be an email, phone number, CPF (Brazilian individual taxpayer registry), or a random key generated by the system.
- Sending Payments: To make a payment, users enter the recipient’s Pix alias, the amount, and any optional message. They can do this through their bank’s app or a payment platform that supports Pix.
- Instant Transfer: Once the payment is initiated, the funds are transferred almost instantly from the sender’s account to the recipient’s account.
- Receiving Payments: For recipients, payments reach instantly, and they are notified of the transaction.
Bem…
Acabei de testemunhar o teaser, a imagem maior está aqui!
(Well…Just witnessed the teaser, the bigger picture is here!)
Statistics
Uau!
Mas o que contribuiu para o sucesso generalizado do Pix?
(Wow!
But what contributed to Pix’s widespread success?)
Pix Features
Benefits of Pix Payments
The benefits of Pix payment are:
- Instant availability of resources
- Quick and easy checkout (as there is no need for POS machines/cashiers)
- Easy automation and payment reconciliation
- Low cost of acceptance (Businesses can easily accept payments without expensive infrastructure)
- Great potential for financial inclusion
- Agility (Payments can be initiated using phone contact lists or QR codes)
- Convenience (Only a smartphone is needed to make payments)
- Electronization of payments (Reduces the circulation of banknotes)
- Open environment for fintech and big techs (encourages innovation and development in the financial technology sector)
What holds for the Future?
The future of Pix is poised for significant growth and innovation and the key developments include:
- New solutions for recurring payments,
- A standardized BNPL product,
- Exploration of contactless payment methods like NFC, and
- Enhancement of security measures to protect the ecosystem from fraud and scams.
These advancements will make Pix even more secure, efficient, and user-friendly.
Pix Summary:
- Allows users to link bank accounts using various ID formats such as email, phone number, Tax ID, or even random characters called Keys/Aliases
- No assigned minimum or maximum transaction limits, except in certain cases.
- The Central Bank of Brazil provides the framework, but each bank or app can set its own policies, such as transaction limits, interchange fees, security protocols, etc
- User data is stored centrally with the Central Bank of Brazil
- No charges for individual transactions. But financial institutions can charge merchants payment settlement fees
- Lacks instant Cross Border Payment infrastructure
