For anyone visiting, moving to, or doing business in Brazil, we have great news for you: the Brazilian government has unveiled a new electronic payment system designed to make purchases, payments, and transfers much easier. The Pix program is an instant payment system from the Central Bank of Brazil that went live in 2020.
The Brazilian Pix System: What is It?
Pix is an instant payment system created by Banco Central do Brasil (BCB)—the Central Bank of Brazil.
In short, the Pix system uses an app that acts as a digital wallet and creates unique QR codes to facilitate transactions between users. They can be done in near-real-time (transactions happen within seconds), even when not online, making this a very efficient payment system.
Financial institutions with more than a half-million active accounts have an obligation to offer Pix registration to their customers. Those that are smaller may choose to do so, but it’s optional for them.
How Is Pix Used?
Pix transfers funds electronically between user accounts. Possible uses include:
- People who want to transfer money to others, like repaying a friend;
- Individuals that need to pay for government services;
- Businesses paying employees or freelancers;
- Customers purchasing items at participating retailers, both in-person and online; and
- Businesses purchasing goods or services.
The Pix payment system enables people to make transactions quickly, even when banks are typically closed. This is important because one of the perceived barriers to using credit or debit cards was that transactions only finalize during banking hours. Pix eliminates that issue.
Each user sets up a unique Pix key.
There are four types of key options: email address, cell phone number, CPF or CNPJ (individual taxpayer ID in Brazil), or a randomly chosen key. Once created, that becomes the user’s account for transactions.
To register an address key, the user works with a financial institution to confirm and link the key to their account. Somebody can also set up an address key without registering it, which means even those who do not use a bank can still use this system.
However, according to the Central Bank of Brazil: “…registering the key is highly recommended to receive a Pix. Although you might be able to receive transactions just by informing your account data, this option is not as practical as using the key and might cause a delay in initiating the transaction, reducing the payer’s advantage in making a Pix.”
Once an individual has their own Pix key, they can use it as a payment method for many transaction types, as mentioned above. It works by providing either the individual’s address key information or by creating a scannable QR code to complete the transaction.
When the transaction is initiated, the user can see the information and confirm the payment.
While the Brazilian Pix system is versatile and practical, there are exceptions to its use.
For example, any business that allows Pix as a method of payment can place a max limit on the number of Pix transactions an individual can process—either per day, month, or in total. There are regulations around the minimum limits businesses can set.
Reasons to Use Pix in Brazil
Pix helps keep overall transaction costs low. This type of payment system has lower setup and maintenance fees. What’s more, the payee has quick access to the payment without having to wait days for the processing to be complete.
If you’re a business, this can open up both in-person and e-commerce options for potential customers who don’t want a bank account but do want the security of not carrying cash.
This type of digital payment can also be a good alternative to credit cards and debit cards, since some of the Brazilian population remain wary of fraud in financial institutions.
Additionally, there are strict privacy controls in place.
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