Brazilian Central Bank announced on Thursday that it will incorporate the payment initiator service to the Central Bank’s backed real-time payments system PIX. In practice, it will be another alternative for P2P transfers and e-commerce transactions made through the instant payment system. With payment initiators, it will be possible, for example, to buy something at the delivery app iFood and pay with PIX without having to leave the app to paste the QR code into the bank’s app (an example considering that iFood could obtain the PIX payment initiator license).
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Currently, while PIX transactions can be made at ATMs and through internet banking, they are generally done through the apps of the 760 payment institutions authorized to operate by PIX with Brazil‘s Central Bank, such as Nubank, the big banks Itaú, Banco do Brasil, Bradesco and e-wallets like PicPay and Mercado Pago, for instance.
In other words, to make a transfer to another person, the customer needs to log into the financial institution’s app and select the PIX option. From there, the user is taken to the PIX environment within the institution’s app, where they will choose how they will make payments, either by typing the so-called PIX key manually, by QR Code, or by “PIX copy and paste” (the QR Code for smartphones that cannot read the image).
In short, with the payment initiator, it will no longer be necessary to log into the financial institution’s app to make PIX transactions.
At a press conference, the head and consultant of PIX management and operations management, Carlos Eduardo Brandt, said that PIX‘s adjustments to incorporate this new service are aligned with the Central Bank’s Open Banking agenda.
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Open Banking allows customers to authorize their accounts to be associated with other environments – other companies – that can initiate a transaction without the user having to use the financial institution’s application. These payment initiators are companies dedicated to this purpose, which do not necessarily offer current accounts.
But nothing prevents Nubank from obtaining the license to be a payment initiator as well, for example. This is even the license that WhatsApp currently has in Brazil.
When Facebook announced WhatsApp Pay in Brazil in June last year, the Central Bank did not authorize the service. But this year, it allowed WhatsApp to be an initiator of person-to-person payments.
In other words, what WhatsApp does today in Brazil (instant transfers within the same messaging app) is what PIX intends to offer now with payment initiators, who will provide services to the so-called PSP (Payment Service Provider). If WhatsApp wants to be a PIX payment initiator, it must request permission from the cenbank and implement the technical requirements by August 30.
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Today, WhatsApp processes payments through Cielo, and payment is made by the debit card associated with the messaging app. If WhatsApp asks for permission to operate with PIX, the user will be able to choose whether to make the transaction by PIX or by debit card within the app, for example.
PIX payments within the e-commerce app itself
Brazilians who pay on e-commerce sites and apps today using PIX need to exit the shop’s app, open the financial institution’s app and do the process of pasting the QR Code link, for example. All of this takes seven steps.
With the payment initiator, the Central Bank wants to reduce friction and cut down the payment steps to just three. This will enable the e-commerce shop itself to be a payment initiator to complete the PIX transaction within the app. It also creates more retention for merchants and fewer chances of the user giving up the transaction midway through the process. The merchant will also be able to partner with a payment initiator company.
The Brazilian Central Bank has not given estimates on how much it expects the novelty to increase PIX transactions, but the idea is to make the service more “democratic” and give users more alternatives, reducing payment steps.
According to Breno Lobo, head of the Central Bank’s Financial System Regulation Department, the payment initiator can even charge a fee for the service. But, he does not believe that companies will do this, because if it becomes more expensive to make the PIX payment through the e-commerce app, the user will simply migrate to the financial institution’s app to make the transaction.
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To give businesses time to adapt to the new functionality, the Central Bank has staggered the timeline for payment initiators as follows:
- August 30: Manual insertion and PIX key; transfers by payment initiators between people available.
- September 30: directly by the institution providing the initiation service; available the option for e-commerce and mobile commerce.
- November 1st: static and dynamic QR Code; available the possibility to make a PIX schedule from payments’ initiators.
PIX has already overtaken traditional banking transfers in Brazil
Since the launch of PIX in November 2020, Brazilians have widely adopted the system. In June, there were 743 million transactions with BRL 441 million transacted and the system has already surpassed the use of other means of payment such as TEDs (a type of bank transfer in Brazil, which is faster because it is done during business hours, but more expensive), DOCs (a banking transfer that works in business days, from one day to another), and even boletos (a type of payment voucher or bank slip that Brazilians use to pay bills and purchases).
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Nuvemshop, an e-commerce platform, said it recorded a 50% increase in payments via PIX between May and June this year. Since the launch of the real-time payments system on the platform in the first half of March, the number of online shops that received instant transfers more than doubled, and the value transacted jumped from BRL 1.5 million (in the first 15 days) to over BRL 16 million in payments.
