PIX is Coming to Europe

Hey Payments Fanatic!

PagBrasil has announced plans to test the instant payment system Pix at various points of sale in Spain, Portugal, and the Netherlands. This expansion is facilitated through strategic collaboration with Wipay and Paybyrd.

During the controlled trial phase, current customers of these systems in the mentioned regions will participate, encompassing a variety of establishments, including department stores, gas stations, vending machines, and hotels.

Pix in Europe?

The decision to test Pix in Europe is strategic. PagBrasil is leveraging the increasing number of Brazilian tourists visiting Europe. According to the Spanish Tourism Institute, from January to September last year, Spain alone welcomed 461,200 Brazilian tourists, reflecting a 32% increase compared to the previous year, with spending exceeding 770 million euros.

The new service, still in its testing phase, will allow Brazilian tourists to make payments directly at European points of sale using Pix, the same instant payment system they use in Brazil.

PagBrasil's Future Plans?

Prior to this step into Europe, PagBrasil had already been working on internationalizing Pix with similar initiatives in Latin America, including operations in Uruguay, Argentina, and Chile.

Moreover, the recent introduction of Pix Roaming, popularly known as "Pix for Foreigners," allows tourists visiting Brazil to make payments using Pix through certain digital wallets and banking apps.

In summary, this new development offers convenience, security, and speed for Brazilian users abroad.

Have a great start to the week!

Cheers,

Marcel

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INSIGHTS

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GOLDEN NUGGET

Have you wondered what happens under the hood when you pay with USD and the seller from Europe receives EUR (euro)?

This process is called foreign exchange:

Suppose Bob (the buyer) needs to pay 100 USD to Alice (the seller), and Alice can only receive EUR. The diagram below illustrates the process.

1?? Bob sends 100 USD via a third-party payment provider.

In the example below, it is Paypal.

The money is transferred from Bob’s bank account (Bank B) to Paypal’s account in Bank P1.

2?? Paypal needs to convert USD to EUR.

It leverages the foreign exchange provider (Bank E). Paypal sends 100 USD to its USD account in Bank E.

3?? 100 USD is sold to Bank E’s funding pool.

4?? Bank E’s funding pool provides 88 EUR in exchange for 100 USD.

The money is put into Paypal’s EUR account in Bank E.

5?? Paypal’s EUR account in Bank P2 receives 88 EUR.

6?? 88 EUR is paid to Alice’s EUR account in Bank A.

Now let’s take a close look at the foreign exchange (forex) market.

It has 3 layers:

? Retail market. Funding pools are parts of the retail market. To improve efficiency, Paypal usually buys a certain amount of foreign currencies in advance.

? Wholesale market. The wholesale business is composed of investment banks, commercial banks, and foreign exchange providers. It usually handles accumulated orders from the retail market.

? Top-level participants. They are multinational commercial banks that hold lots of money from different countries.

When Bank E’s funding pool needs more EUR, it goes upward to the wholesale market to sell USD and buy EUR.

When the wholesale market accumulates enough orders, it goes upward to top-level participants. Steps 3.1-3.3 and 4.1-4.3 in the infographic explain how it works.

Source: ByteByteGo

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