A guide through PIX, Brazil’s new instant payment system allowing for the first time peer-to-peer money transfers

April 15, 2020
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The Central Bank of Brazil announced last month its plan to launch an instant payment system, PIX, expected to be fully operational in November 2020. The new system will be mandatory for all larger banks in Brazil.

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The new system allows for the first time peer-to-peer money transfers, bills, and Boleto Bancário payments as well as taxes and service fees (such as passport issuing, for example) – in real-time. Similar to the European  SEPA system, Brazilians will now be able to pay and send funds 24/7 (including holidays), via mobile banking, online banking, and ATMs, and between individuals and organizations.

Cheap, fast, transparent and secure

As announced by the BCB, PIX payments will be enabled through:

  • QR Codes: Entering mobile or homebanking, select PIX Payment and scan the provided QR code. Payment data is displayed for the user to agree and confirm the payment.
  • Address keys: Selecting the type of address key that identifies the receiver, such as mobile phone number, e-mail, or CPF/CNPJ. Once the receiver’s data appears on the smartphone’s screen, the user can tap to confirmation.
  • Proximity payments: Connecting to PIX via technologies that allow the exchange of information by proximity, such as NFC technology.
  • Manually: Filling in the information is one of the less popular models but also available in the new system.

Brazilian consumers are used to waiting for a payment confirmation even up to 24 hours. PIX is expected to accelerate online transactions not only for the users ‘benefits but also for the eCommerce companies, as the solution will be displayed at the checkout page, significantly reducing the waiting time for order confirmations and delivery.

Record-breaking opportunity for cross-border merchants

Merchants operating with a cross-border model in Brazil will gain a unique opportunity to boost local reach surfing this wave. A potential number of 45 million adults will be encouraged to use the new financial system. With better and faster ways of paying online, Brazilian consumers are expected to enjoy the new ease of online payments and start purchasing new goods and services. The main difference to some digital wallets, which already offer real-time transactions in Brazil, is the reach of PIX as all larger market players do have to fulfill the BCB’s requirements.

It is expected that due to the reliant and fast characteristics of this new system, it will eventually turn into Brazil’s preferred system for peer-to-peer transfers. Especially if you consider the huge lack of online payment Brazil is experiencing at the moment. Cross-border merchants should not wait too long to get ready for PIX, as new technological implementations such as new online payment methods will boost business.

“The project will be the embryo of what I believe is a total transformation in the country’s future financial intermediation, and will consolidate what we understand as the new form of payment methods, with the new fintech industry and with open banking, “ stated Roberto Campos Neto, President of the Central Bank of Brazil during the launch.

High expectations on a necessary measure

The Central Bank of Brazil launched the initiative as a financial inclusion platform. According to João Manoel Pinho de Mello, the Central Bank of Brazil’s Director of Financial System and Resolution Organization, the expected inclusion with PIX will be even higher than the recent card payment methods enhancements.

The Brazilian reserve bank noted: “The existence of a unique brand is essential for users (payers and recipients) to clearly identify this new way of making payments and transfers. The visual identity will facilitate the understanding and adoption of the tool”.

What interested merchants need to do

Like any new financial infrastructure, this revolutionary payment system is expected to raise some questions concerning regulation, taxes, user-behavior and technical integrations. When considering leveraging this new payment opportunity, you will have to consider the following:

  1. Clarify gaps of knowledge and important issues with your trusted partner on-site in advance to embrace Brazil’s new payment solution PIX.
  2. As of now, only payment institutions authorized by the BCB will be allowed to settle transactions directly on the PIX platform. Therefore, Merchants will need to integrate directly or indirectly to local agents to enable payment processing through PIX.
Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Market, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

The new system allows for the first time peer-to-peer money transfers, bills, and Boleto Bancário payments as well as taxes and service fees (such as passport issuing, for example) – in real-time. Similar to the European  SEPA system, Brazilians will now be able to pay and send funds 24/7 (including holidays), via mobile banking, online banking, and ATMs, and between individuals and organizations.

Cheap, fast, transparent and secure

As announced by the BCB, PIX payments will be enabled through:

  • QR Codes: Entering mobile or homebanking, select PIX Payment and scan the provided QR code. Payment data is displayed for the user to agree and confirm the payment.
  • Address keys: Selecting the type of address key that identifies the receiver, such as mobile phone number, e-mail, or CPF/CNPJ. Once the receiver’s data appears on the smartphone’s screen, the user can tap to confirmation.
  • Proximity payments: Connecting to PIX via technologies that allow the exchange of information by proximity, such as NFC technology.
  • Manually: Filling in the information is one of the less popular models but also available in the new system.

Brazilian consumers are used to waiting for a payment confirmation even up to 24 hours. PIX is expected to accelerate online transactions not only for the users ‘benefits but also for the eCommerce companies, as the solution will be displayed at the checkout page, significantly reducing the waiting time for order confirmations and delivery.

Record-breaking opportunity for cross-border merchants

Merchants operating with a cross-border model in Brazil will gain a unique opportunity to boost local reach surfing this wave. A potential number of 45 million adults will be encouraged to use the new financial system. With better and faster ways of paying online, Brazilian consumers are expected to enjoy the new ease of online payments and start purchasing new goods and services. The main difference to some digital wallets, which already offer real-time transactions in Brazil, is the reach of PIX as all larger market players do have to fulfill the BCB’s requirements.

It is expected that due to the reliant and fast characteristics of this new system, it will eventually turn into Brazil’s preferred system for peer-to-peer transfers. Especially if you consider the huge lack of online payment Brazil is experiencing at the moment. Cross-border merchants should not wait too long to get ready for PIX, as new technological implementations such as new online payment methods will boost business.

“The project will be the embryo of what I believe is a total transformation in the country’s future financial intermediation, and will consolidate what we understand as the new form of payment methods, with the new fintech industry and with open banking, “ stated Roberto Campos Neto, President of the Central Bank of Brazil during the launch.

High expectations on a necessary measure

The Central Bank of Brazil launched the initiative as a financial inclusion platform. According to João Manoel Pinho de Mello, the Central Bank of Brazil’s Director of Financial System and Resolution Organization, the expected inclusion with PIX will be even higher than the recent card payment methods enhancements.

The Brazilian reserve bank noted: “The existence of a unique brand is essential for users (payers and recipients) to clearly identify this new way of making payments and transfers. The visual identity will facilitate the understanding and adoption of the tool”.

What interested merchants need to do

Like any new financial infrastructure, this revolutionary payment system is expected to raise some questions concerning regulation, taxes, user-behavior and technical integrations. When considering leveraging this new payment opportunity, you will have to consider the following:

  1. Clarify gaps of knowledge and important issues with your trusted partner on-site in advance to embrace Brazil’s new payment solution PIX.
  2. As of now, only payment institutions authorized by the BCB will be allowed to settle transactions directly on the PIX platform. Therefore, Merchants will need to integrate directly or indirectly to local agents to enable payment processing through PIX.
Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.
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