By almost every measure, Pix, Brazil’s low-cost instant payment system championed by the Central Bank, has been an astounding success. It has been widely embraced by the population, growing consistently to the point that it has become ubiquitous in day-to-day transactions.
Now there is one more achievement on that list.
In September, the payment system launched in late 2020 broke a new record. It reached the threshold of 1 trillion reais in monthly transactions, or roughly $ 200 billion. Pix, available 24/7, now processes over half a million transactions per minute, rapidly gaining market share in Brazil’s rising universe of digital payments.
“This milestone symbolizes the great success in implementing a real-time payments infrastructure in Brazil,” Bruno Diniz, a fintech advisor and best-selling author in Brazil, told Fintech Nexus. ” We should go much further in the next few years, as there is an extensive roadmap of additional features that will be added to Pix.”
Pix was launched by the regulator roughly two years ago as part of a broader agenda to drive inclusion in Brazil. The bank sought to foster competition in the sector and reduce the cost of banking services. Other initiatives by the regulator include open banking, which was implemented this year. In addition, the central bank is working on a project to create its own central bank digital currency.
But as of yet, no other endeavor has been as successful as Pix was.
A tool for financial inclusion
Its swift growth has been key to the further digitization of Brazil. It has inspired many as a leading case of disruption in emerging markets. “Given the immense benefits – in particular the free payment for individuals – it has become a real tool for inclusion,” said Carlos Augusto de Oliveira, fintech Board member at Bossa Nova Investimentos.
A critical distinction between Pix versus other similar initiatives in the region, such as Mexico’s CoDi, is that Pix was embraced by almost every financial institution. Over 750 firms have signed up to operate with Pix in Brazil. This includes banks, credit unions, payments fintechs, and state-run institutions. In the case of CoDi, a handful of banks account for the majority of transactions.
Indeed, there have been some issues. The meteoric adoption of Pix has raised concerns about security and fraud. Estimates by Brazilian banks point out that scams can cause losses of 2.5 billion (or $500 million) this year, of which 70% would originate from Pix transactions.
The central bank has repeatedly tightened measures to stave off this risk. However, the sheer scale of Pix makes it virtually impossible to weed out crime entirely.
Time for businesses to embrace PIX
Going forward, fintech experts argue that there is more room for Pix to continue to grow. New functionalities, such as Pix Garantido (enabling a BNPL model through Pix) are being rolled out, further expanding the use cases for the technology.
The volume of monthly transactions has been growing consistently since its launch, for which it is possible that 1 trillion reais in monthly transactions will be but a stepping stone toward a higher number.
“There’s a lot to explore yet in Pix,” said Murillo Restier, a Multi-Acquirer Products manager at Fiserv. “The user experience can still be improved, and there is much to build on top of Pix. We have no idea how far it can go.”
According to data from the Central Bank, peer-to-peer transactions dominate the majority of Pix transactions, with almost 75% of all transfers. B2B procedures, on the contrary, involve as little as 2.4% of the total number. However, they account for almost a third of transactions by monetary value.
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Pix is widely used to settle low-ticket transactions. On the contrary, larger transfers still rely on traditional channels such as bank transfers.
Many expect that to gradually change going forward. The use of Pix will be more widely embraced by companies as well as individuals conducting high-ticket transactions.
“Pix is an absolute success among consumers,” Diniz said. “Now it should continue to gain strength within companies for larger transactions.”