Of all the world’s real-time payment systems, Brazil’s Pix is not the largest in terms of transaction count (that accolade belongs to India’s UPI). However, it is the most distinct in terms of functionality, governance, and data.
Pix has a clear central owner and operator.
The central bank of Brazil (BCB) manages Pix in full. It owns the scheme rules and settlement, it operates Pix, sets the pricing, owns the product roadmap, and mandates participation by institutions over a certain size (those with over 500k active accounts).
It’s a clear example of how so-called emerging economies may have an advantage when building new payment systems. We can think of this as leapfrogging. Card payment penetration in Brazil was considerable among high earning professionals, although those with lower incomes, or operating in the informal economy tended to operate with cash. The introduction of Pix was a means of moving from cash to QR code for much of the population, and for many Brazilians this meant leapfrogging the nascent card rails entirely.
The move to Pix was helped by the fact that Brazil has fewer banks than many comparably sized countries. Five legacy banks hold around 80% of deposits (Itaú, Bradesco, Banco do Brasil, Caixa, Santander Brasil), there’s a successful neobank in the form of Nubank, and an emerging digital layer in the form of Mercado Pago, therefore implementing large-scale change required less coordination than in most other large economies. Also the existing payment rails in the market were considered far from optimal. Card acquiring had, for the most part, sat with two local players and with limited competition (Cielo and Rede). Bank transfer options for account-to-account payments were slow and expensive.
The ground was ripe for transformation.
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