During the last three years, Brazil’s very popular PIX payment system has become the country’s favorite, replacing cash and wire transfers, and is now threatening the dominance of credit cards in the ever-growing e-commerce market. The instant payments designed by Brazil’s central bank, is in its functionality, much like the VIPPS system we have in Norway. For online retailers, it is helping with cash flow in a sector with tight margins, while undercutting the legacy business of banks and fintechs built on existing credit card infrastructure.
It’s been nearly two years since the Brazil Central Bank chief Roberto Campos, claimed we would soon see the end of credit card existence, as they discussed the potential for open finance and the Pix Platform. Brazil’s central bank launched the Pix protocol in 2020, mandating banks to integrate their accounts with instant digital transfers that are free for individuals.
Last year, the use of PIX surged by 74% to nearly 42 billion payments across the Brazilian Economy – Surpassing credit and debit card charges combined by about 23%. Orders paid with PIX in the online retail market surged 22%, and in December, one-third of all purchases were made using PIX.
New PiX innovations are on the horizon as the central bank talks about possibilities such as recurring payments and purchases in installments. Pix is putting pressure on the card networks, as they are removed from their position as intermediaries, receiving no cut from the PiX transactions. Goldman Sachs told clients in a note, that the growth of PIX “can limit the use of credit cards and pre-payment volumes”.
Eduardo Lopes, public policy director at NuBank, Latin America’s largest digital bank, says that PIX has been and will continue to be the most disruptive technology in the financial segment in Brazil for the next few years.
Pix moved more than 17 trillion reais ( $3,4 trillion ) in 2023.
Source: Reuters
