PIX, the electronic payment system that is revolutionizing Brazil

By on September 4, 2022 0

When Brazil’s central bank announced in 2020 that it was launching a free electronic payment system called PIX, many people had no idea what it was talking about.

Today, instant transfers are so ubiquitous that Brazilians use them tens of millions of times a day, for everything from paying rent to buying groceries to donating money to street beggars.

Walking among cars stopped at a red light in Sao Paulo, beggar Robson Ferreira witnessed first-hand the revolution the system wrought in Latin America’s largest economy.

“I usually get more money in PIX than cash,” says the unemployed 48-year-old, carrying a hand-scribbled sign that reads “Need help. Accept PIX.”

Below is a number that drivers and passers-by can use to deposit money directly into his account, a process that takes seconds on a cellphone.

“People said to me, ‘We don’t even have any more money on us. Put your PIX on it,'” Ferreira said.

In less than two years, PIX has become the most popular payment method in Brazil, surpassing credit and debit cards. This is the first time that a government alternative to plastic has been successfully implemented in Latin America.

Analysts say the large number of smartphones in Brazil – more than one for each of the country’s 213 million people – and government aid payments to 20.2 million recipients fueled the system’s take-off.

The PIX is so popular it became a campaign issue in Brazil’s October elections, with President Jair Bolsonaro claiming credit – although in reality work on the system began under the former president. Michel Temer (2016-2018).

Bolsonaro’s main opponent, left-wing ex-president Luiz Inacio Lula da Silva (2003-2010), has meanwhile been the target of a disinformation campaign, with false reports that he plans to kill PIX for protect the big banks, whose fees on electronic transfers have evaporated since the system was launched.

Cash replacement

Available 24/7, PIX allows anyone with a bank account to send and receive money instantly.

All senders need is a banking app on their smart phones and the “key” to the destination account – usually a phone number or tax ID.

Some cash registers and payment terminals also allow users to scan a QR code which makes payment even faster.

For now, PIX is still used mainly for small transactions.

The total amount transferred through PIX in the first quarter of the year was about two billion reais ($392 million), about one-fifth of other electronic transfers.

“The PIX has mainly replaced the transactions that were done in cash before,” explains Leandro Vilain of the Brazilian Federation of Banks (Febraban).

But the number of transfers is enormous.

In the first quarter, Brazilians used the PIX for 4.2 billion transactions – 22.9% of the total – compared to 3.7 billion for credit cards (19.3%) and 3.5 billion for debit cards. debit (19.8%), according to the central bank.

Business owners also benefit.

Other payment methods have high fees and take longer to process – up to 28 days for credit cards, according to the central bank.

Kidnapping, fraud

On the beach in Rio de Janeiro, where he makes a living selling coconuts – including by PIX – Jose Jefferson sees another benefit.

“The PIX is much more secure. With cash, there’s more chance of it being lost or stolen,” he says.

However, the system is not immune to security threats.

In May, kidnappers seized Anna Novaes, a 52-year-old architect in Sao Paulo, and held her at gunpoint for eight hours, forcing her to take out loans from two banks and transfer the money into their accounts through PIX.

They stole a total of around $8,000, Novaes told AFP.

She managed to get the loans canceled by the banks.

There were 154,972 PIX fraud reports in July, more than double the number in January, according to the central bank.

The statistic – a tiny fraction of all transactions, the central bank points out – has not dampened user enthusiasm.

Not even for Novaes, which took out insurance covering electronic transactions and went back to using PIX.

“I don’t want to give up convenience,” she says.