A mobile payments system that is publicly controlled, easy to use and without fees (for individuals and small businesses) is “tough to beat.”
Over the past decade Brazil, like China, has morphed from a heavily cash-dependent economy into one of the world’s most cashless countries. >It has managed to do this while significantly reducing its dependence not only on Visa and Mastercard’s global payment card duopoly but also the mobile payment apps of US tech giants. And that, as readers can imagine, has caused consternation on Wall Street and Silicon Valley, and by extension Washington DC.
At the root of the transformation is a three-letter word that has become ubiquitous throughout Brazil: Pix. Launched by the Central Bank of Brazil in November 2020, Pix is, in the central bank’s own words, “an instant payment scheme that enables its users — people, companies and governmental entities — to send or receive payment transfers in few seconds at any time, including non-business days.”
It is similar to US payment apps like Zelle, but instead of being controlled by a consortium of fee-gouging banks, it is controlled by the Brazilian central bank.
Where Are the Fees?
Two things set Pix apart from most other instant payment systems in use around the world: first, it is free of charge to individuals and small businesses while the processing fees for larger businesses are still much lower than those for debit or credit cards; and second, it must be adopted by all licensed financial institutions operating in the country.
Becoming a Pix user could not be easier. All you need is a Brazilian bank account and an email address or a phone number. You can then register a personal or company Pix key using a taxpayer ID number (Brazil’s version of a social security number). There are already 934 financial institutions participating in the system.
As mentioned, Pix was launched in late 2020, coinciding with the government’s pandemic-era emergency aid program that led tens of millions of people to open bank accounts to receive government benefits. They also quickly embraced the zero-contact Pix payment system.
The rate of uptake since then has been nothing short of blistering. A 2022 Bank of International Settlements report found that Pix had the fastest adoption curve among all real-time payment systems in the world. Three years later, the system boasts 175 million users of all income levels — equivalent to around 80% of the country’s population — and accounts for nearly half of the country’s financial transactions, reports the New York Times.
But not everyone is pleased by its success:
[T]he Office of the U.S. Trade Representative is investigating PIX, claiming that Brazil has given an unfair advantage to the digital payments system by requiring all banks to offer it.
U.S. trade authorities also say that, by protecting consumer data that PIX collects, the Brazilian government is hurting American companies that use such information to make business decisions and develop new products.
“U.S. companies see this data as critical,” said Ignacio Carballo, a senior consultant at Payments and Commerce Markets Intelligence, a research firm based in San Francisco. “This places a lot of power in the hands of Brazil’s government.”
PIX is also a monetary blueprint for the BRICS alliance of developing economies, which includes Brazil, Russia, India, China and South Africa, as it seeks to create an international payment platform aimed at reducing reliance on the U.S. dollar.
Trump’s Tariffs
As readers may recall, the Trump administration imposed a 50% super tariff on imports of many Brazilian goods on August 6, just weeks after the Office of the US Trade Representative launched its investigation into Pix.
The ostensible reason for the tariffs was to protect Trump’s far-right buddy Jair Bolsonaro from prosecution in Brazil for trying to organise a coup against Lula. As we noted at the time, Trump had also taken umbrage at Brazilian President Luiz Inácio Lula da Silva’s pronouncements in favour of dedollarisation at the recent BRICS summit.
Could the controversy surrounding Pix have also played a part, though?
While there is no definitive evidence, it is certainly possible, especially given the scale of the threat Brazil’s instant payments system poses to US financial and business interests. What if there was a contagion effect, as other countries in the region and beyond try to develop similar systems. Brazil, after all, is the largest economy in Latin America.
Facebook parent company Meta has already felt the impact of Pix’s success, reports France 24:
The company had planned to introduce WhatsApp payments in Brazil in 2020 but banking authorities delayed the rollout, arguing that it could undermine Brazil’s own payment systems. Meta eventually launched the WhatsApp payments system in May 2021 – six months after Pix entered the market – but it has failed to gain traction. Some in the industry blame the decision to delay, citing the Brazilian government’s vested interest in the Pix programme.
Lula himself released a bombastic statement rejecting any possibility of Pix being altered or privatised in order to benefit US financial interests.
“We defend Pix from any attempt at privatization. Pix is from Brazil. It’s public, it’s free and it’s going to stay that way.”
Pix is also attracting significant interest from other countries, notes a recent article in IPS Noticias (machine translated):
According to the Central Bank, there have already been more than 50 expressions of interest in learning about the system, through consultations and even visits to the bank.
For retail companies, the benefit is obvious: the payment is instant in contrast to payment by credit cards that delay payment for several weeks and charge a 5% commission.
For consumers, the ease of payment, through a smartphone, is the main attraction. It is no longer necessary to carry a credit card, which is vulnerable to theft and fraud [NC: surely the same applies to cell phones; in fact, more on that later]…
More than half of the purchases for delivery to customers’ homes are currently paid for by Pix…. In [a restaurant consulted by IPS] it still represents a minority of payments; credit cards still predominate, but the difference is shrinking.
Use is not totally free for companies,… because banks charge them for Pix operations, but it is much cheaper than other means of payment and can be reduced to zero if the bank account maintains a certain sum in monthly deposits.
Pix’s success has raised “debates on public digital goods,” Gisele Truzzi, a digital law expert at Truzzi Advogados, a private law firm based in São Paulo, told Rest of World. This is in reference to burgeoning discussions over whether more countries should consider developing their own real-time payments systems instead of relying on private players.
Disintermediating the Global Card Duopoly?
And that is why payment card companies like Mastercard and Visa are up in arms. But the competition they face in Brazil could be about to get even more intense if a new plan to offer Pix payments in instalments takes off.
Pix in instalments is essentially a new financial product that will be linked to the customer’s personal credit status while the interest rates will be borne by each bank based on the payer’s risk profile. All of this will be done without charging additional user fees and without the intermediation of card operators.
As a recent article in Veja Negocios contends (machine translated), Pix in instalments has the potential to become a genuine alternative to credit cards:
“The objective is not to eliminate any means of payment, but to expand the options available to the population,” says Breno Lobo, deputy head of the Department of Competition and Financial Market Structure of the Central Bank.
The expectation, also shared by the Brazilian Federation of Banks, is that the new feature will further boost the already widespread adoption of Pix. By June 2025, more than 168 million Brazilians had already made or received at least one instant transaction.
Today, the system leads by far among payment methods in the country: 46% of the population uses the tool as their main form of transaction, even though it was launched less than five years ago. Debit and credit cards, despite decades of presence in the market, are preferred by only 17% and 11% of users, respectively.
By embracing a largely publicly led digital payments infrastructure that cuts out the usual middle men, Brazil has turned financial innovation on its head. In most advanced economies, cash’s dominant role in the retail payments system has been eroded by digital payment alternatives, mainly from the private sector, in particular contactless debit and credit cards. Mobile wallets operated by US tech giants are also on the rise.
This has been a massive boon for Visa and Mastercard, which have done everything they can to supplant their biggest rival (to date), cash. In Brazil, however, Pix has not just overtaken cash; it has overtaken everything. As an article in Rest of World notes, it overtook debit card transactions in January 2022 and credit cards in February 2022, and now dwarfs transactions via credit cards, debit cards, bank slips, wire transfers, prepaid cards, and checks combined.
As John P Ruehl writes for Economy for All, “Fast payment systems exist worldwide. However, Brazil’s Pix stands out for its rapid mass adoption, massive user base, international standing, and high degree of central bank control.” And the fact that it is free of charge for most users.
To compund matters for the Visa and Mastercard duopoly, Brazil also recently opened the doors to their biggest global competitor, the Chinese card company Union Pay. According to an article by Tribuna de Minas, after striking a strategic partnership with Brazilian fintech Left, UnionPay plans to offer more competitive transaction fees as well as payment solutions that go beyond traditional physical cards, including digital wallets and mobile payment platforms.
Pix’s success is also preventing Silicon Valley firms from being able to hoover up vast reams of consumer data in Brazil, notes the New York Times:
U.S. trade authorities also say that, by protecting consumer data that PIX collects, the Brazilian government is hurting American companies that use such information to make business decisions and develop new products.
“U.S. companies see this data as critical,” said Ignacio Carballo, a senior consultant at Payments and Commerce Markets Intelligence, a research firm based in San Francisco. “This places a lot of power in the hands of Brazil’s government.”
And out of the hands of US companies, which “never managed to gain a strong foothold in Brazil” anyway, Daniel Santos Kosinski, a professor of economics at the State University of Rio de Janeiro, told Rest of World. Because Pix is free to use, it “is an extremely capable competitor and tough to beat.”
Contrast this with the European Central Bank’s plans around the digital euro. One of the main justifications trotted out for launching a CBDC in the euro area is to protect Europe from the domination of US banks, card companies and payment apps. Yet as the German financial journalist Norbert Häring notes, the ECB does not want to compete with the US banks and payment service providers or cause any trouble:
The ´´[US players] will be integrated into the project and their systems will be closely connected. The large US IT and payment transaction groups are involved in the project development, and the ECB wants to have the data stored in US cloud services so that customers do not shift their balances en masse from less secure bank deposits to secure e-euros, with relatively low holding limits for the latter.
The Downsides and Dark Sides of Pix
There are some problems with the Pix system, however.
For a start, Pix appears to be accelerating the demise of cash, one of the last vestiges of privacy and anonymity. According to a payment survey by Google (of all companies), just 6% of Brazilians regularly used cash in 2024, compared to 43% in 2019. But this is Google we’re talking about, and Google, like all tech giants firms that have created mobile payment apps, has a clear interest in exaggerating cash’s decline (h/t albrt).
The central bank’s 2024 survey, “Brazilians and their Relationship with Money”, presents a different picture: in 2021 cash was used by 83.6% of the population; by 2024 that number had fallen to 68.9%. By contrast, 76% were using Pix. The proportion of people who never or rarely use cash had risen to 68% in 2024 from 55.7% in 2021.
Needless to say, the breathless findings of Google’s payments survey were reported far more widely in the local media than the far more sober findings of the central bank’s.
As is happening in many other less-cash economies, it is becoming harder to pay with cash. Just yesterday, it was announced that physical currency will no longer be accepted as payment at tolls along one of Brazil’s busiest highways, the BR-101 Sul/RS.
As we reported in 2023, there have been a flurry of legislative proposals over the past decade aimed at limiting cash use or doing away with it altogether:
The first proposal, presented way back in 2016 by deputy Gilberto Nascimento of the Social Democratic Party, seeks to eliminate the use of coins and cash bills completely. All financial transactions, it says, should be carried out virtually, through applications and electronic platforms. The bill is under consideration by the Constitution, Justice and Citizenship Committee.
The second proposal, tabled by Paulo Ramos in 2020, a former deputy of the Democratic Labour Party, prescribes a more incremental approach. First, the three largest denomination bills (R$50, R$100 and R$200) should be abolished, and then over the next two years the remaining banknotes and coins should be gradually phased out, This project has been under discussion in the Finance and Taxation Committee since last year.
The third proposal, also from 2020, is under the purview of the Economic Development Commission. Proposed by Reginaldo Lopes, the current leader of the governing PT caucus in the Chamber of Deputies, recommends setting a “deadline for the elimination of all production, circulation and use of cash and that all financial transactions after that date take place only through the digital realm.”
Incidentally, the second and third proposals preceded by a matter of months the beginning of development of Brazil’s central bank digital currency, the so-called Drex, which is expected to launch some time next year. Interestingly, the central bank recently announced that it is abandoning the all-important blockchain component of Drex due to scaling and privacy challenges. Security issues also seem to have played a part in the decision.
An Epidemic of Digital Fraud
Like largely cash-free Sweden, Brazil is grappling with an explosion of digital fraud. Its success as a “fintech hub” has attracted hordes of cyber criminals, The Economist reported in January. According to El País, Pix is fuelling an epidemic of digital crime, with 1,640 mobile phones stolen every hour.
The target, of course, is not the device itself but its applications, contacts and passwords, possession of which has helped Brazil’s criminal gangs to exponentially increase their profits. Each victim loses an average of 1,500 reais ($275, a little more than the monthly minimum wage) in addition to the smartphone.
The costs to the public are spiralling. As with the digital fraud cases in Sweden, the financial losses from these scams fall exclusively on the victim. The Brazilian Forum of Public Security estimates that losses resulting from digital fraud amounted to $34 billion last year. According to the NGO’s calculations, this is more than the total sum of money spent each year on public security by Brazil’s central administration, states and municipalities.
The security flaws became even more apparent in July when a group of sophisticated cyber-criminals managed to hack and empty the central bank reserve accounts of at least six financial institutions. After getting access codes to the Pix and central bank payment systems from an employee of a third-party provider, the thieves walked away with more than 800 million reais ($148 million).
The central bank responded to the attack by temporarily suspending the use of Pix for a few hours for several institutions, leaving millions of users in the lurch. The attack revealed serious vulnerabilities in the Brazilian payment system’s IT infrastructure, particularly among private-sector external providers. The giant hack also underscored one of the biggest dangers of real-time payment systems: immediate settlement prevents corrections for errors and scams.
Money and banking serve as blood and the circulation system of the state, much as government is the nervous system. We have evolved enough to understand that as government has to serve the entire society, it is the quintessential public utility. We have not yet come to see the same principle applies to banking. When the medium enabling markets is a player in those markets and not a utility, the rest are tenants farmers to the banks.
Precisely. The currency remains an institution of state sovereignty and power in much the same way as the postal service was in the 19th and early twentieth centuries.
Oh the Humanity! A government with actual power: surely this is unacceptable. Sometimes it’s difficult to believe how blatant hubris can be.
As for PIX, it’s hard to say if the advantages outweigh the dangers, but also seems like it’s a more or less irreversible process at this point. Outlawing cash would be deeply stupid, though. Depending on a generalized payment system in order to settle even basic transactions simply means that when something goes wrong (as it inevitably must) people will simply have to make their own money, as the with the old tally sticks.
And now we see this USian arrogance coming from mid-level, midwit capitalist apparatchiks. When did market research firms get a bully pulpit?
This system seems like a definite improvement over what we see in the US. Payment companies with cute little one syllable names are popping up like mushrooms and they are nothing but parasites latching on the the existing ACH system. Payments often arrive in the name of the payment company rather than in the name of the company they are sending payment for which is just a massive time waster. Sometimes fees are deducted, and there’s even one payment company that tries to sign up customers by placing the fee on the recipient of the payment rather than charging the sender. It would be nice to be able to initiate ACH payments directly from one’s own bank account without all the bloodsucking middlemen making bank for not doing much of anything.
That being said, it would be nice to have this type of system without also banning cash. I still find cash to be the quickest option, providing the teenager at the cash register has been taught how to make change.
I couldn’t believe that quote. They are just admitting it out loud:
It should be in the hands of private companies to be mined for profit, where it belongs! How dare the government cut off the gravy train and use it to benefit regular people?
I’m fascinated by this angle.
I wager there’s an (unmentioned by trade authorities) AI interest in the data.
The recent power shut down in Spain and Portugal alltogether for a day highlights the absurdity of cashless economies. During that dark day, the only people who had some cash in their pockets were the only ones who could go shopping, catch no electric buses, pay for the most basic items, even buy batteries for their devices, lanterns whatever. We were told that similar accidents will certainly follow, so once and for all: NO BANS ON REAL MONEY! And last but not least, our privacy will be defended against the data hungry giants.
This almost sounds like banking services as a public good which in this era is heresy. I found US objections very revealing-
‘[T]he Office of the U.S. Trade Representative is investigating PIX, claiming that Brazil has given an unfair advantage to the digital payments system by requiring all banks to offer it.
U.S. trade authorities also say that, by protecting consumer data that PIX collects, the Brazilian government is hurting American companies that use such information to make business decisions and develop new products.
“U.S. companies see this data as critical,” said Ignacio Carballo, a senior consultant at Payments and Commerce Markets Intelligence, a research firm based in San Francisco. “This places a lot of power in the hands of Brazil’s government.”’
The main objection is that all that Brazilian banking data is staying in Brazil and that American companies have to see that data for their own purposes. Are they really worried that all that data will go dark and that the US will not be able to see what is going on in the Brazilian economy? China and Russia are going dark and it may happen that a lot of other countries will follow suit by following Brazil’s model. Is the US going to deman that PIX be privatized so that an American corporation can buy it up? Sorta like happened with Tik Tok. Actually a lot like Tik Tok.
Are those real quotes? They almost read as satire with how arrogant it is.
Sounds like it’s a pretty good idea to me based on that.
Such self-righteous indignation!
How dare Brazil prevent us from controlling its monetary systems and plundering its citizens’ data for our own nefarious purposes?
Doesn’t it know we are the Masters of the Universe, and that it needs our permission to take back control?
Nick C: Pix’s success is also preventing Silicon Valley firms from being able to hoover up vast reams of consumer data in Brazil
True, but just a current issue. Long term in the US and wherever else Silicon Valley can pull it off is that the tech lords are aiming to supplant Wall Street finance as the main power in the land and de facto issuer of currency, with efforts like Libra being just first, very clumsy attempts in that direction. This will become more evident in the ruins after the AI bubble bursts. Conceivably, too, it might even be relatively better for USians in that tech is less hostile to the need for an a UBI than current finance which creates nothing and is purely dedicated siphoning rents and wealth from others.
But much, much better yet is to be like Brazil and out of the power of US finance and Big Tech.
So for example —
“I left my investment banking job for Amazon. Bankers have no idea what’s coming”
https://www.efinancialcareers.de/en/news/i-left-my-investment-banking-job-for-amazon-bankers-have-no-idea-what-s-coming
I don’t know much about Brazil, but six percent of transactions paid in cash does not seem realistic in a country with a large Système D component. If anybody knows how they define the universe of transactions I would be interested in hearing about it.
Albrt, will take a closer look at the stats. I think you may be right, it’s too low.
Hello,
I’m from Brasil (with a S). Cash transactions are really disappearing – when I try to pay in cash, usually the other part doesn’t have change anymore. They prefer receiving in pix because it’s more secure against theft and the money is instantly in their accounts.
I can go weeks without any money in my wallet and it doesn’t make any difference.
Thanks Duda. That chimes with what I’ve been hearing from Mexican and Argentinean friends who visited Brazil in recent months.
Brazil has a strong tradition of active public sector, wich still stands altough under severe attack. Pix has evolved on top of SPB (stands for Brazilian Payment System in portuguese), wich is a nationwide network infrastructure implemented in the early 2000’s wich mandated each and every clearing transaction to go trough central bank in real time. If any given bank, no matter its size, fails to be logged in at 6am, it is not allwed to open for business until login is completed. Period. As a former bank IT guy, I know very well the stress of “SPB CONNECTION DOWN!!!”. General use of paper checks plummeted decades ago, now virtually no one uses them. Also since decades ago there was an expedited transfer system (TED), mandated, wich had the money show up in the destination account by next day morning. With cutoff hours and tariffs tough.
I suspect that those hard requirements about instant transfer of payments in Pix and SPB have something to do with the reminiscence of very high inflation in Brazil during the 20th century. When inflation is high, having a middleman delaying a payment by weeks (as with credit card companies do), or even just a couple of days (for bank transfers when inflation is truly spectacular) means unbearable financial losses for the merchants.
I find it interesting that Brazil is implementing something a bit similar to what M-pesa achieved years ago in several African countries — though more comprehensive and with more modern techniques. I wish Europe had such dirt cheap, modern electronic payment systems instead of the proliferation of mobile wallets and card schemes — but in addition to cash, not as a substitution to it.
Crazy inflation was controlled in 1994 (I believe same timeframe as many other countries), but at that time transfer delays already were not a huge problem except for really remote locations. In late 80’s there was already a decent teller machine network across the country (in 1988 people in a branch located in a not so central city flocked to see our ATM cards, as machines had not reached there yet…). Since 1988 DOC, an electronic transfer with 2-3 days delay was fully available (again, central bank mandated). In 2002, TED transfer followed suit, with closure due the next business day (mandated…). Paper checks, 2-3 days. Banks started connectivity efforts IIRC in early 80’s. DOC and TED are currently decomissioned (mandated…) due to Pix. I believe these centralization is more due to central bank getting grip in the economy. It is still a public body, altough bite by bite privatization is making way.
tremendously difficult when traveling abroad and small vendors only take the local digital wallet payment which requires, of course, a local bank account. had this problem in SG, struggled to find an ATM just to eat at a hawker market. at least in HK and TW the payment systems can be loaded with cash if necessary.
FRB offer their “FedNow Service” but seems to have gone nowhere.
“From Pix to ethanol, the accusations that prompted the Trump administration’s trade investigation against Brazil.”
July 16, 2025
“The United States government, under Donald Trump, officially announced the opening of a trade investigation against Brazil, alleging ‘unfair’ practices that would restrict American trade. The broad package of accusations ranges from complaints about Pix, the Central Bank’s payment system, to grievances about illegal deforestation.”
https://www.bbc.com/portuguese/articles/cp82rzpz0gyo
Brazil’s Pix payment system appears to be very similar to India’s Unified Payment Interface (UPI) system which was launched in 2016/17. UPI is also managed by a central authority – National Payments Corporation of India (NPCI). All banks are required to offer this service. Users can use UPI mobile app of any bank of their choice to create a Virtual Payment Address (VPA). In most cases this VPA is just their phone number, but it can be any unique name of their choice, just like creating an e-mail ID. They can link one or more of their bank accounts with their VPA. The bank in which they have their account need not be the same as the bank whose UPI app they have chosen to use. All transactions are instantaneous. There is no transaction fee, irrespective of the amount of transaction. Users can transact even just 1 rupee for free. Though there is no technical limitation on maximum amount of transaction, the banks have lobbied the central bank to place an upper limit of 100,000 rupees per day for person-to-person transactions, by falsely claiming that higher amounts result in money laundering, which makes no sense.
US Banking is still in the horse-and-buggy days of money transfers, but it seems to be quite intentional. Russia has the ubiquitous SBP system that lets anyone transfer money to anyone else by mobile phone number within seconds. Even little Costa Rica has SINPE that offers the same service. In the US it still takes a couple days even if you have account links set up. The US banks promote Zelle as the new hot way to transfer money, and it’s pretty fast but has low limits and you can’t select the bank if the recipient has more than one. Many of the US banks push higher amounts into “wire transfers” even when it’s between two customers at the same bank, if you want to arrange it online. You can often get better rates from “international” transfer services like Wise and Xe for transfers within a bank. The relentless rooting for fees is ugly.
So of course it’s terrible that Brazil is exposing the limitations of the carefully-curtailed US banking apparatus. They might be forced to upgrade their processes and technologies. It reminds me a bit of GM being overtaken by Japanese and German auto manufacturers starting in the 1970s. First they denied the competition, then they mocked it, and finally they went to the government for bailouts. I’m sure that would never happen with our banking system.