The Brazilian Central Bank has launched its instant payment system’s brand PIX this Wednesday, along with its starting date: 16th of November. In parallel, however, the card companies in the country are running to develop their own instant payments system, to be launched earlier, in this first semester of 2020. The card networks Visa, Mastercard, Elo and American Express came together about a year ago to make the project happen, in addition to a series of card issuers an acquirers.
The idea, revealed firsthand by the Brazilian newspaper Valor Econômico in January, does not hurt the regulation under discussion in the BC, and seeks to offer another alternative to Brazilian users that do not have a checking or a payment account, but use debit and prepaid cards offered mainly by fintechs and neobanks.
In general, both systems will operate 24-7 and will use the QR Code as the main payment method. In other words, the reading of a code by a smartphone will be the standard process of the two systems, whether in the physical environment (to pay for a subway ticket, for example), or in the online environment, to pay for a product or service. To enable this operation, financial institutions and fintechs, in general, will have to offer instant payment among their application options.
What is the difference between the two systems, then? “Basically, in the BC system, transfers will be made via bank accounts. In ours, since we are talking about the payment industry, it will work via cards, debit and even prepaid cards”, explains the coordinator of the Digital Transformation Committee of the Association of Credit and Service Cards Companies (Abecs) in Brazil, Percival Jatobá.
This Wednesday, in addition to determining the date and brand of the new instant payment system, the BC also defined that the adhesion of financial and payment institutions with at least 500 thousand active accounts will be mandatory–which means that about 30 organizations, responsible for more than 90% of the country’s transactional accounts, will promptly participate in the system.
Another difference between the wot systems is in the users. In both cases, individuals should be the first to test the tools, making payments to each other. In the case of the BC, however, the integration of government entities as users is also expected to happen from the beginning, in order to facilitate the payment of taxes and public services.
The path of card companies, however, may be different. “We seek the best experience for the individual user before venturing into other experiences,” says Jatobá. As a result, legal entities must be integrated, as well as a whole range of possibilities typical of the payment industry, such as offering credit and installments within the new system.
According to him, the committee responsible for the project mapped initiatives in more than 35 countries and did not find any similar system out there, that is, that uses the payment industry processes, such as encryption and tokenization, with complete security for the structure already in place and that it will be used for instant payments.