Economy

Brazil's instant payment system, PIX starts operating with 734 institutions

PIX will work 24 hours a day, every day of the year, at an operational cost significantly lower than that of modalities already consolidated in the market

President of the Central Bank of Brazil, Roberto Campos Neto
President of the Central Bank of Brazil, Roberto Campos Neto, in an interview in Brasília, in March 2020. Photo: Reuters/Ueslei Marcelino/ File Photo.
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  • Transactions from individuals to individuals and from individuals to businesses are free of charge provided they are made by electronic means;
  • In return, banks will be able to tax PIX transactions between companies, both at the payer and recipient end.

PIX, Brazil’s instant payment system, was officially launched on Monday. The president of the Brazilian Central Bank, Roberto Campos Neto, said that the system’s launch is only the tip of the iceberg, meaning that this is only the beginning of a real revolution and that PIX will have new features soon, such as cashback and scheduled payments.

The official launch occurs after the Central Bank opened PIX for restricted operations from November 3 to 15 so that the institutions could make final adjustments to ensure the system’s full functioning.

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The authority reported that 19 institutions did not perform all the tests required during this period and, therefore, will start offering PIX in the “near future”.

With that, 734 institutions have been making PIX available since this morning. In a press conference at noon on Tuesday, the Central Bank directors stressed that the “window” for new institutions to enter PIX opens again on December 1.

Up to the previous day, more than 71 million PIX keys had been registered and more than 1 million and 900 thousand transactions were carried out between different institutions, with a financial amount of over BRL 780 million.

During this first day of full operation, PIX didn’t show any instability. According to the authority, any instability that occurred in the period, was in the process part of the institutions themselves.

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Campos Neto argued that PIX is the starting point for a major evolution in payment methods, which answers the society’s demand for something that is fast, cheap, safe, transparent, and open – elements present in the transactions made by the system.

During the morning presentation, which also had the participation of banks, fintechs, entities, and consultants, Ana Carla Abrão, head of Oliver Wyman in Brazil and vice president of the Board of Directors of B3, the Brazilian stock exchange, said that the PIX can account for 22% of the country’s transactions by 2030.

How PIX will work?

PIX will work 24 hours a day, every day of the year, at an operational cost significantly lower than that of modalities already consolidated in the market – 1 cent for every 10 transactions –, such as bank transfers and payments by credit and debit cards.

Transactions from individuals to individuals are free of charge, provided they are made by electronic means. Purchases made by citizens with PIX cannot be charged either. In return, banks will be able to tax PIX transactions between companies, both at the payer and recipient end.

These transactions can be made using “keys” – users’ data that identifies them within the system–, such as cell phone number, ID number, or e-mail.

During the press conference, the directors also pointed out that PIX has a series of security mechanisms, among them: each transaction must be authenticated by the financial institution where the user has an account, using a password or biometrics; institutions can freeze a transaction for 30 minutes to examine it better; the same institution, if it finds an inconsistency linked to a key, it can inform the other participating institutions about the problem.

They also recalled that institutions can use the same limits that they already adopt in transactions such as debit card payments to increase the security of the system in that first moment when they are still learning how their customers behave within the new system.

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Campos Neto stated that the arrival of PIX will bring financial inclusion, competition in the financial system, and the offer of new products, in addition to efficiency and safety for users.

He stressed that, despite the coronavirus pandemic, the Central Bank did not abandon its agenda, having accelerated some processes due to the perception that the recovery from the crisis will involve the increase and incentive in technology.

“We have a process where PIX is more than a payment: it will become a digital identity process, it will improve the provision of public services because we are digitalizing people, we know who the people are, where they are, what products they consume,” he stated.

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Present at PIX’s launch event and the press conference, the Central Bank’s director of Financial System Organization and Resolution, João Manoel de Pinho de Mello, stated that although the authority led the process of creating PIX, this occurred in close collaboration with the market. “This dialogue with industry, with civil society, is what assures us and gives us enormous confidence that PIX is a means of payment whose design is easy, safe, convenient, and for everyone,” he said, adding that the Central Bank will ensure that there is competition.

At the press conference, Pinho de Mello told LABS that among the new features scheduled for the system in the first half of 2021 are: cash withdrawal (at retail and other kinds of businesses), cashback, and the scheduled payment, in addition to the guaranteed payment – a feature that will be built in credit operations.

To LABS, Campos Neto stressed that not all features depend on PIX. “Over time, we will identify demands that will come from people”.

The authority’s head of the Department of Competition and Financial Market Structure, Angelo Alverne Duarte, also emphasized that in addition to what is on the Central Bank’s agenda, there are already several new possibilities that depend on the integration of new participants to PIX, and that this will happen in the next months. “This is the case, for example, with energy bills, which still depend on a resolution by Aneel (the country’s energy regulatory agency).”