PIX: this instant payment system will change the way Brazil pays

Brazilians are already early adopters when it comes to social media and new technologies. This hyper-connected country relies on smartphones to manage everything from socializing to shopping and, coming soon, paying. By 2023, mobile devices will account for nearly half of the country's retail online sales, according to the 2020 Global Payments Report. eWallets are already on the rise and will only gain more relevance over the next few years, but Brazil’s most important payment trend in 2020 is PIX.

This instant payments platform will be accessible to users through a smartphone app beginning October 5, when users will be able to register and enable transfers by sharing personal identification information such as phone number and email. By November 16, the service will be fully available for free transfers between people and businesses as well as for eCommerce payments.

A new payment experience

PIX, which is being developed by Brazil’s Central Bank, is expected to complete most transactions within 10 seconds – currently, they can take from a few minutes to a full 24 hours or more. PIX is set to outpace current local favorites – TED and DOC transactions – plus, stand-by options like cash and Boleto Bancário.

How does PIX do it? For starters, it sets a lower bar to entry since making a payment will only require a smartphone, selecting a contact to send money or scanning a QR code, making the whole checkout process simple and seamless for users and merchants.

How PIX will win the race

Besides being convenient and fast, PIX will also offer security benefits by leveraging the multi-factor authentication recommended by Brazil’s Central Bank. This increasingly popular security measure creates multiple protection points to reduce the risk of money movement by linking users’ phones to their passwords or biometrics.

Beyond security, PIX will use an open architecture that empowers users with accounts in different financial institutions or eWallets to make instant and cost-free transactions between accounts. This will save users the high end-of-month bank fees they currently pay for these cross-institution transactions.

PIX will inspire competition between banks, fintechs, other financial players and even companies from other sectors, like retail. This evolving market will drive innovation and improve services for the clients.

Finally, PIX will be less expensive than having a credit card, since it will cut out the fees. The fact that the new platform has smartphones as the main interface is also a factor that will win new clients. In 2019, with a population of 210 million¹, the country already had over 230 million operating smartphones².

Merchants need to keep up

PIX is set to modernize the payment scene in Brazil and merchants need to run with the changes. The platform is a gamechanger for them as well since the payment method is set to make values instantly available and to be less expensive to process than debit or credit card transactions. Merchants are working to offer more and more convenience and seamless checkouts, and PIX can be an important tool to achieve those goals.

In addition to faster cash flow and improved customer experience at the checkout, PIX will provide access to an additional part of the Brazilian population. Thanks to the lower point of entry and the reduction or elimination of fees as nontraditional banking solutions continue to evolve, we’re expecting the underbanked population to drive more money into the eCommerce ecosystem, which will be unlocked for early PIX adopters on the merchant side.

PIX is just the beginning

Over the last few years, Brazil’s Central Bank has been working to modernize the country’s financial environment and PIX is only one of the steps down this path. By the end of 2021, Brazil will have an open banking regulation; ultimately, the open platform will integrate APIs from banks and other institutions that are part of the financial ecosystem. This means that users will be able to manage their money through several different platforms, not only their bank’s app. They also become owners of their financial data which, only with consent, can be shared with other companies that want to offer more personalized services.

Brazil is following the steps of other countries that have successfully implemented measures to bring innovation to their payments sector. In Australia, for example, the New Payments Platform (NPP) was launched in 2018, and by January 2020 had already registered 384 million transactions. Singapore, on the other hand, has been using Fast and Secure Transfers (FAST) since 2014 and can register up to 218 million transfers a month.

Users and innovation are coming first in many markets around the world and Brazil is no exception. Companies that deeply understand and value those verticals are set to beat the competition and be more successful. Worldpay is monitoring not only PIX, FAST and the NPP but also other major digital payments trends that are emerging around the globe, and can be an ally to merchants willing to make the shift to customer-first.

Benefits for users

Faster: Resources instantly available
Cost-free
Safer
Simpler and more convenient: More seamless checkouts

Benefits for merchants

Less expensive than other electronic payment methods
Faster: Resources instantly available
Simpler and more convenient: More seamless checkouts

Benefits for the payments ecosystem

Making payments more digital
More competition: New players and solutions that are better and less expensive