PIX, Inspiring Central Banks.

Brazil has stepped boldly ahead by introducing PIX, "Pagamentos Instantaneos" (Instant Payments), as a response to the evolving needs of the digital economy.

Launched by the Central Bank of Brazil in November 2020, PIX offers a seamless and real-time solution for money transfers, payments, and financial transactions. Unlike traditional bank transfers that can take days to process, PIX enables transactions to occur within seconds, 24/7, including weekends and holidays.

Some might find PIX somewhat familiar, akin to the well-known Spanish favorite Bizum to a certain extent. However, there are many noticeable differences. While the latter is a payment system originally designed for individuals (P2P); PIX is more versatile, covering peer-to-merchant (P2M) payments with greater depth. Whether you're settling a debt over pizza with a friend or indulging in online gadget shopping, PIX has you covered.

At its core, PIX operates through an interconnected infrastructure that allows users to initiate transactions using a variety of identifiers such as phone numbers, email addresses, tax identification numbers, or even random keys generated by financial institutions. This removes the need for sharing complex banking details, enhancing privacy and security.

Two major factors fueling Pix's success are the involvement of major banks, which kick-started network effects for users, and secondly, the dual role played by the Central Bank of Brazil as both infrastructure provider and rule setter.

To facilitate transactions, each financial institution participating in PIX has a direct connection to Brazil's Central Bank through its payment platform. When a transaction is initiated, the Central Bank acts as an intermediary, swiftly validating the transaction details and transmitting the funds between the payer and the payee's bank/PSP. This immediate settlement eliminates the need for intermediaries, resulting in faster and more cost-effective transactions.

The adoption of PIX has significantly impacted various aspects of the Brazilian economy and society. But, what makes PIX truly innovative?

Its influence has now transcended borders. In July 2023, the FedNow was introduced — an instant payment infrastructure developed by the Federal Reserve. This approach aims to offer real-time payment services to financial institutions of all sizes, drawing inspiration from the successful deployment of platforms like Brazil's PIX and similar models worldwide.

Interested in adoption rates? The chart below speaks for itself.

According to BCB stats, as of May 2023, PIX had been embraced by over 140 million people (that's nearly 80 percent of Brazil's adult population) and 13 million businesses in just two and a half years since its launch.

To sum it up, PIX has led to notable shifts in how Brazilians handle their finances. Its blend of speed, simplicity, and security has accelerated the shift to digital transactions, reducing the reliance ?on physical currency.

If you're operating an online business in Brazil, incorporating Pix payments could be essential for your success.