Brazilian payment system Pix (BRL)
Background
Pix is a new digital payment system launched by the Central Bank of Brazil (BCB) in November 2020. Pix allows instant payments and transfers and is available for private users and businesses.
Just one year after its launch, the number of Pix users grew by 14,000%, and by January 2022, 71% of the Brazilian population was already using the payment system app. In October 2021, Bloomberg, a well-known international publication, called the Pix app "ubiquitous" (ubiquitous) — by that time, this payment system had conducted more than 6 billion transactions totaling 3.75 trillion Brazilian reals (~$627 billion).
By 2023, Pix had become the central payment system in Brazil — at that point, it had already processed over 42 billion online transactions. As of March 2024, Pix was used by 15 million companies and 153 million Brazilians — about 75% of the country's population. The Pix payment system has become so popular that even other countries, such as Italy, are considering a bilateral agreement to implement the transaction mechanism used by BCB.
Pix allows you to make online payments and transfers in less than 10 seconds 24/7 via a QR code or a unique in-app generated key (Pix code), with an average transaction processing time of 2.5 seconds.
Pix features
By the time it launched in 2020, the Pix system only supported a small set of basic transactions such as:
- Payment scheduling (autopayments);
- Initiating payments through third-party providers (PISPs);
- Cash withdrawals from merchants or through ATMs.
However, later on, the Pix app introduced new features, including;
- Pix Troco — getting change after shopping;
- Pix Saque — withdrawing cash when transferring funds between bank accounts;
- Regular payments by data entry by the recipient or one-time authorization by the payer;
- Buy now pay later option (BNPL);
- Contactless payments using NFC.
To ensure secure transactions, the Central Bank of Brazil has developed four basic principles:
- User authentication to initiate any transaction, including the management of "Pix aliases";
- Tracking of payments and transfers;
- Secure data exchange through an encrypted private network;
- Security rules and mechanisms to reduce fraud risks.
Among other things, Pix is a member of an anti-fraud system called PSP. This means that all accounts of fraudsters using Pix will be flagged and entered into the PSP database, through which information about them will be shared with other system members.
The Central Bank of Brazil continues to work on improving Pix. It plans to introduce new features in the future that will further simplify bill payments and transfers between individuals and companies.
Benefits of the Pix payment system for businesses and private users
For the e-commerce sector, Pix provides benefits such as:
- Instant, real-time payments that eliminate intermediaries when settling payments for goods and services, thereby reducing the cost for businesses to make payments;
- Optimized cash flow: Pix makes funds available to the company immediately upon payment, allowing them to be immediately reinvested or used to pay off debts;
- Reduced fraud risks associated with sales by eliminating the need for cards and passwords. Pix uses a proprietary security system developed by the Central Bank of Brazil itself;
Pix users, in turn, receive the following benefits:
- Free payments and transfers between Pix users and partners;
- Ability to make payments around the clock on any day - no need to wait up to 3 days, as in the case of using bank transfers;
- No less secure than bank transfers: Pix uses strong authentication and cryptography methods to protect transactions. All local legal regulations protect all Pix users' data;
- No need to have a bank account to make payments and transfers through the Pix app.
