PIX is ‘much cheaper’ for merchants than credit and debit cards, economists from BIS and Brazil's Central Bank point out

Just over 9 million companies have joined Brazil's instant payments system so far, representing 60% of the businesses that have some relationship with the national financial system.

A man stands near the headquarters of the central bank in Brasilia September 22, 2011. Photo: REUTERS/Ueslei Marcelino/ FIle photo.
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PIX, Brazil’s instant payment system, is “much cheaper” for merchants than card payments in general, pointed out an article published this Wednesday by the body that is considered the central bank of central banks, highlighting its growth potential among businesses after its vertiginous rise among individuals.

According to the document, co-authored by economists from Brazil’s Central Bank – Angelo Duarte, head of the Competition and Financial Market Structure department at the Central Bank, and Priscilla Koo Wilkens, from the same team – and experts from the Bank for International Settlements (BIS), PIX has an average cost of 0.22% per transaction for Brazilian merchants. In contrast, debit cards cost a little more,1%, and credit cards 2.2%.

READ ALSO: PIX will make bank transfers grow in Brazilian e-commerce, says FIS report

Brazil’s instant payments system is also more competitive than the credit card industry in the U.S. (with a 1.7% average rate), Canada (1.5%), and the European Union (0.3%), added the economists.

Launched in November 2020, PIX is free for individuals, but the monetary authority has allowed banks and payment institutions to freely set costs for companies, both for transfers and receipts of funds.

BIS’ document highlighted that transactions between individuals are still dominant in Brazil but reduced their share to around 75% of PIX total transactions in February, with people-to-business (P2B) payments quickly gaining ground.

“A further increase in P2B usage is expected over time, as new overlay services such as direct debit and electronic bill payment are scheduled to be released in the near future,” wrote the economists.

READ ALSO: Mercado Libre’s fintech Mercado Pago starts operating as a payment initiator in Brazil’s PIX

Good news for merchants, not so much for acquirers

The growing use of PIX by commerce, in general, may harm acquiring companies, such as Cielo, controlled by Banco do Brasil and Bradesco, and Rede, controlled by Itaú, since their revenues are linked to the use of cards in their POS machines.

This group also includes companies such as PagSeguro, Stone, and GetNet, this last one controlled by Santander Brasil.

The document pointed out that about 9.1 million companies have joined PIX so far, representing 60% of the companies that have some relationship with the national financial system.

In January this year, a survey carried out by the Brazilian Micro and Small Business Support Service (Sebrae) has pointed out that 8 out of 10 small businesses in the country already use PIX as a payment method – a 9% increase compared to the previous survey, from August 2021, when 77% of them used the method.

Just 15 months after its launch, PIX has already been used by 114 million people in Brazil – 67% of the adult population – moving 6.7 trillion reais and reaching the level of credit and debit cards.

Translated by LABS

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