The Latin American Payments Blog
PIX payments are taking Brazil by storm
Brazil’s new instant bank transfer system called PIX is Brazil’s new infrastructure for instant payments. Announced on February 19th, 2020 by the Central Bank of Brazil (BCB). It’s likely to replace not only TED and DOC bank transfers, but also eat significantly into the market share of debit card payments. Especially the outdated and current de facto standard form of payment: Boleto Bancário.
With payments settled in less than 10 seconds, and available 24/7 including weekends and holidays. It is no wonder that within its first-week PIX reported 12.2 million transactions settled. These transactions equal out approximately 9.3 billion BRL or approximately 1.7 billion USD. All financial institutions, e-wallets, and payment providers obligated to implement it. Being available to the majority of the Brazilian population, it has double the reach of local credit and debit cards.
What are the benefits of PIX?
PIX offers excellent benefits for both customers as well as businesses. These are:
- Instant payments – PIX boasts payment processing that is as fast as 2 seconds and no more than 10 seconds. Available 24/7 including weekends and holidays it is incredibly accessible. Also enabling technologies such as near-field communication (NFC) and its keys to be converted to QR codes for the payment market. This makes it the fastest payment method currently in the market. When compared to European solutions such as Sofort, iDEAL or Swishthan credit, and debit cards.
- No chargebacks – PIX assists with merchant errors, and easily discovers unauthorized or invalid transactions in general. This helps decrease costs, confusion and problems for the seller.
- Lower cost – PIX is much more cost and time-effective. When comparing with the high fees imposed by the Brazilian acquirers when using credit cards. The service is free of charge to individuals, except for receipts for product or service sales. Because it’ss an instant service, there is less fraud, no chargebacks, and barely any settlement time. Meaning there are automatically lower costs involved.
- Mobile payments – PIX allows for users to do contactless payments, payments via QR Codes and NFC. This is beneficial for customers making them more likely to shop at merchants that allow for this service.
- Payment options for the unbanked – PIX provides a method of payment that is entirely outside of the realm of traditional banking. Digital-wallets also allow users to create PIX keys and use them to transfer funds using the PIX infrastructure. This opens up a whole new line for unbanked individuals.
What is the Impact of PIX so far?
Currently, there are 735 different financial services institutions in Brazil utilizing PIX. Banco de Central Brazil has shown some great results when it comes to the current situation. With a total of 34.5 million users with at least a single key. With 83.5 million keys registered in just one week. It’s no surprise to see how well the service did in its first month.
According to the Banco de Central Brazil Bank, all of this is only the beginning. They believe that the first month is only an initial adoption period. After this period people will get more familiar with the system and more comfortable implementing it as a payment option. In the first month, 116 million keys were registered with R$83.4 billion BRL over 92.5 million transactions. This all averages out to approximately 46.4 million people and 3 million companies being registered. Individuals reported average transactions of R$496, while companies had transactions of an average of R$15,00.
The current reports of transaction rejections are another reason to be excited about the platform. EDT has seen 4-5% rejection since PIX started, however, keyed versions of PIX reported only 0.5% rejection. This on top of the ability to use PIX for paying mobile bills, recharging mobile prepaid services, and fixed prepaid services. Makes it a very appealing payment system to integrate.
What Changes Can You Expect?
As PIX becomes more popular there are additional features that are expected to be released in 2021. This new system will enable individuals to share data and their banking services with different institutions in various ways. This will provide a simple experience for digital payments and allows for advanced features of banking. These include moving bank accounts and carrying out additional transactions.
The expectation is that the platform will account for approximately 22% of the electronic payments. That are conducted in the country by 2030. Though some predict that it will actually reach 25% in as little as five years. This means that it would allegedly be doing business between 1 trillion reais and 1.5 trillion reais each year. This indicates a large amount of volume. When considering that the current debit and credit card payment numbers in Brazil are approximately 1.8 trillion reais or about $382 billion USD.
As this platform continues to grow and extend, It is expected to revolutionize the way that people do business. And the way the financial world works as a whole.
Additional features will be added soon. This includes a tool that would allow for payment of charges due on future dates, which will be available later throughout 2021.
PIX in Business
Businesses are able to request a maximum of 20 keys per account. And none of the keys can be repeated when it comes to different accounts. The legal entity that creates this type of account will be the one responsible for the costs involved as well. But no matter how the process is carried out it will be easily implemented
Costs are also easy to determine. Those who sign up as individuals will not have any charges for transactions. Unless they receive money from commercial activity or if they use the system through their phone or face-to-face.
For legal entities, there are charges for each transaction. This is dependent on the size of the company. The smaller the company, the lower their fees would be. Allowing the smaller companies and entities to compete better with the larger ones.
PIX and epag
Here at epag, we help businesses looking to offer their products and services to the 200 million citizens living in Brazil and Latin America with a means of payment.
Estimates suggest that 93.5% of people living in the region have no form of international payment. What this means is that you are missing out on nearly 186 million potential customers. By using our integrated payment gateways, you will be able to accept all forms of payment in a seamless and swift transaction.
In order to accept local currencies in Brazil, you need to have a local entity in Brazil. This means either going through a complex and lengthy process trying to establish your own branch. Which requires an in-depth understanding of the very intricate tax laws. Or using a local payment processing partner, such as epag.
Epag is very supportive of PIX as an initiative and is keen to offer innovative solutions to our partners as soon as they become available. We pledge to swiftly handle the necessary development to create a great user experience for increasing overall conversions and revenues.
Our one-stop-shop lets you trade in the region without worrying about any hidden transaction costs. Not only that, we can settle the transactions in your local currency. Get in touch with us today to find out how we can help you expand your business.