The Central Bank of Brazil is gearing up for Pix’s next significant milestone: recurring payments, a strategic move to expand its already significant presence in the growing digital payments market.
“After the success of one-time transactions, now is the time for recurring payments”, Carlos Brandt, Pix Management chief at the central bank, said at the EBANX Payments Summit in São Paulo this week. One of the masterminds behind the novel instant payment network, he said Pix was now coming close to processing almost 1.5 trillion reais in monthly transactions, or close to $300 billion.
The central bank is now working on Pix Automatico to keep growing, as the recurring feature is known. “Our goal is to have it live in the first half of 2024”, he said at the conference hosted by the Brazilian payments fintech.
The evolution of Pix echoes other similar initiatives in the region and around the world. This includes the Federal Reserve’s FedNow project. While Pix was introduced in 2020, it quickly evolved from a digital mobile payment tool to include many new features.
“We’ve seen strong adoption from young individuals from all income levels,” Brandt said. “There is a lot of trust in Pix, which is, in turn, a powerful tool for financial inclusion.” Millions of Brazilians have carried out their first digital transaction with Pix, he said.
New features for Pix
Alternatives, such as credit or cross-border payments, are expected down the line. For now, recurring payments are right next on the radar.
Pix Automatico resembles Direct Debit in the U.S. and is aimed at facilitating periodic payments such as utility bills, schools, gyms, loan repayments, streaming services, subscriptions and so on. As in direct debit, it would be subject to prior authorization from the paying user.
The regulator had laid eyes on recurring payments for a while. However, a long drawn-out strike at the central bank last year slowed down the agenda.
“We want it to be as inclusive as the other feature has been,” said Brandt. Pix Automatico will be designed for both in-store payments and virtual shopping. “The product will be flexible enough to attend every industry, whether it be insurance, utilities or something else.”
The new feature builds on top of other innovations, such as Pix Initiator. Here, the collector company can trigger the payment and simplify the process for the consumer. “It has the potential to change everything,” Wagner Ruiz, one of the co-founders at EBANX, said.
A massive leap in digital payments
Over the past decade, Brazil has witnessed a significant surge in digital financial transactions, with the introduction of Pix in 2020 emerging as a pivotal moment in this evolving landscape. The mobile payment juggernaut has garnered an astounding 140 million individual users, nearly two-thirds of the population. Pix has seamlessly woven itself into the tapestry of daily life across Brazilian cities, from bustling restaurants to quaint street vendors.
According to a report released by the central bank, Pix payments accounted for nearly 30% of all transactions in 2022. This figure surpasses the utilization of credit cards, at 20%. Debit cards came next, with 19%.
Beyond Pix, the central bank is working on two significant initiatives. The first of which is open finance, which is gradually being adopted in Brazil. Then comes the Drex, the central bank digital currency. For Brandt, there is “a lot of synergy” between all of these initiatives. “Pix can join forces with Open Finance and Drex,” he said. “All three projects combined will offer a very complete set of payment solutions for our society.”
