A mobile payments system that is publicly managed, user-friendly, and free of charges for individuals and small businesses is a formidable innovation.
Over the past decade, Brazil has undergone a remarkable transformation, shifting from a cash-centric economy to one of the most cashless societies worldwide, akin to China. This shift has been achieved while significantly reducing reliance on the global payment card dominance of Visa and Mastercard, as well as mobile payment applications from American tech giants. Such changes have understandably ruffled feathers on Wall Street, in Silicon Valley, and in Washington, D.C.
At the heart of this evolution is a term that has become commonplace across Brazil: Pix. Introduced by the Central Bank of Brazil in November 2020, Pix is described by the central bank as “an instant payment scheme that allows users—individuals, businesses, and governmental entities—to send or receive payments within seconds, at any time, including weekends and holidays.”
Pix shares similarities with US payment applications like Zelle, but rather than being governed by a consortium of banks that charge fees, it is administered by the Brazilian central bank.
Where Are the Fees?
Pix distinguishes itself from most global instant payment systems in two key ways: first, it is completely free for individuals and small businesses, while fees for larger enterprises are still considerably lower than those for debit or credit cards; second, all licensed financial institutions in Brazil are required to adopt it.
Becoming a Pix user is remarkably straightforward. All that is needed is a Brazilian bank account and an email or phone number. Users can easily register a personal or business Pix key tied to their taxpayer ID, Brazil’s equivalent of a social security number. Currently, there are 934 financial institutions involved in the system.
Pix was launched at the same time as the government’s pandemic relief program, which prompted millions of citizens to open bank accounts for government aid and rapidly adopt the contactless Pix payment method.
Since its introduction, Pix’s growth has been phenomenal. A report from the Bank of International Settlements in 2022 noted that Pix had the fastest adoption rate of any real-time payment system globally. Now, just three years later, the system boasts 175 million users, representing about 80% of Brazil’s population, and accounts for nearly half of all financial transactions in the country, as reported by the New York Times.
However, not everyone is pleased with Pix’s ascent:
The Office of the U.S. Trade Representative is investigating Pix, claiming that Brazil has created an unfair advantage for this digital payment system by mandating that all banks provide it.
U.S. officials also suggest that the Brazilian government’s protection of the consumer data collected by Pix hampers American companies that rely on such information for strategic decision-making and product development.
“U.S. companies see this data as vital,” stated Ignacio Carballo, a senior consultant at Payments and Commerce Markets Intelligence. “This gives significant power to the Brazilian government.”
PIX is also seen as a financial prototype for the BRICS alliance, comprising Brazil, Russia, India, China, and South Africa, aiming to create a global payment solution that lessens reliance on the U.S. dollar.
Trump’s Tariffs
As many will recall, the Trump administration imposed a staggering 50% super tariff on numerous Brazilian imports on August 6, just weeks after the investigation into Pix began.
The stated reason for these tariffs was to safeguard Trump’s ally Jair Bolsonaro from legal issues in Brazil related to alleged coup attempts against Lula. Simultaneously, Trump seemed irked by Brazilian President Luiz Inácio Lula da Silva’s advocates for dedollarization made at a recent BRICS summit.
Could the controversy surrounding Pix be a contributing factor?
While there’s no concrete proof of this, it remains a possibility, especially given the considerable threat that Brazil’s instant payment system poses to American financial interests. There’s potential for a domino effect, as other nations may seek to develop their own systems. Brazil, being the largest economy in Latin America, undoubtedly holds strategic importance.
Meta, the parent company of Facebook, has already felt the repercussions of Pix’s success. France 24 reports:
The company intended to introduce WhatsApp payments in Brazil in 2020, but regulatory delays hindered the rollout, citing concerns that it might undermine Brazil’s own payment framework. Meta eventually launched WhatsApp payments in May 2021—six months post-Pix launch—but it has yet to gain significant market traction. Industry insiders suggest that the delay was influenced by the Brazilian government’s commitment to the Pix initiative.
Lula has made strong statements rejecting any plans to privatize or alter Pix for the benefit of U.S. financial entities.
“We defend Pix from any attempt at privatization. Pix belongs to Brazil. It is public, free, and will remain that way.”
Additionally, Pix is garnering interest globally, as mentioned in a recent IPS Noticias article:
According to the Central Bank, over 50 parties have expressed interest in learning about the system, either through consultations or visits to the bank.
For retail businesses, the advantages are clear: payments are instant compared to the weeks-long processing times and 5% fees associated with credit cards.
For consumers, the convenience of mobile payments eliminates the need to carry easily stolen credit cards. Currently, more than half of all home delivery purchases are paid via Pix. Although a restaurant consulted noted that Pix representa minority of payments, its share is growing rapidly.
While use is not entirely free for companies (as banks charge for Pix transactions), costs are considerably lower than alternative payment methods, potentially dropping to zero if the bank account maintains a minimum monthly balance.
Pix’s success has sparked discussions around public digital assets, as noted by Gisele Truzzi, a digital law expert at Truzzi Advogados in São Paulo. This inherently raises questions about whether more nations should explore developing their own real-time payment systems rather than relying on private entities.
Disintermediating the Global Card Duopoly?
This is why major payment card firms like Mastercard and Visa are alarmed. However, competition in Brazil could intensify further as plans for offering Pix payments in installments gain traction.
Pix in installments is essentially a new financial service linked to the user’s credit profile, with interest rates determined by individual banks based on risk assessment. Importantly, there will be no extra user fees or the involvement of card issuing companies.
A recent article in Veja Negocios states that Pix in installments could emerge as a true alternative to credit cards:
“The goal isn’t to eliminate any payment method but to broaden the options for the public,” remarked Breno Lobo, deputy head of the Department of Competition and Financial Market Structure at the Central Bank.
“The expectation, also voiced by the Brazilian Federation of Banks, is that this new feature will significantly enhance Pix’s already widespread use.” By June 2025, over 168 million Brazilians are projected to have made or received at least one instant transaction.
Currently, Pix leads among payment options in Brazil: 46% of the population uses it as their primary transaction method, while debit and credit cards are favored by only 17% and 11% of users, respectively, even though they’ve been in the market for decades.
By creating a largely government-run digital payment system devoid of common intermediaries, Brazil has disrupted traditional financial innovation. In many developed nations, the use of cash has dwindled due to the rise of digital payment methods—primarily from the private sector, such as contactless debit and credit cards and mobile wallets from U.S. technology firms.
Visa and Mastercard have flourished from this shift, striving to eliminate cash as a competitor. However, in Brazil, Pix has not merely led to the decline of cash; it has emerged as the dominant method—outpacing all others. As noted in an article from Rest of World, it surpassed debit card transactions in January 2022 and credit card transactions by February 2022 and now eclipses transactions from credit cards, debit cards, bank slips, wire transfers, prepaid cards, and checks combined.
As John P. Ruehl writes for Economy for All, “Despite the existence of fast payment systems worldwide, Brazil’s Pix is exceptional for its rapid mass adoption, extensive user base, international recognition, and substantial control by the central bank—all while being free for most users.”
Moreover, Brazil has recently welcomed a crucial global competitor—Union Pay, the Chinese card company. Following a strategic alliance with Brazilian fintech Left, UnionPay aims to offer competitive transaction fees and payment solutions extending beyond conventional physical cards, encompassing digital wallets and mobile payment systems, as reported by an article from Tribuna de Minas.
Pix’s widespread adoption is also preventing Silicon Valley entities from amassing large amounts of consumer data in Brazil, as highlighted by the New York Times:
“U.S. trade authorities argue that the Brazilian government’s efforts to protect consumer data collected through PIX impede American firms that rely on this information for business insights and product development,” according to Ignacio Carballo. “This grants Brazil’s government substantial power.”
This has shifted control away from U.S. firms, which have “never managed to establish a strong foothold in Brazil,” according to Daniel Santos Kosinski, an economics professor at the State University of Rio de Janeiro. He notes that Pix’s zero-cost structure makes it “a highly competent competitor and exceptionally challenging to outmatch.”
In contrast, the European Central Bank’s initiatives concerning a digital euro center around safeguarding Europe from U.S. financial institutional domination, while as pointed out by German financial journalist Norbert Häring:
The ‘[U.S. players] will be included in the project, and their systems will be intricately linked. The large American IT and payment transaction groups are involved in the project’s development, and the ECB aims to have data stored in U.S. cloud services to prevent customers from transferring their balances from less secure bank deposits to secure e-euros with relatively lower holding limits.”
The Downsides and Dark Sides of Pix
Despite its many strengths, the Pix system is not without its challenges.
For one, Pix seems to be hastening the decline of cash, which has long provided a level of privacy and anonymity. A payment survey by Google indicated that only 6% of Brazilians regularly used cash in 2024, down from 43% in 2019. However, as is often the case with big tech companies, their findings may exaggerate cash’s decline.
In contrast, according to the central bank’s 2024 survey, “Brazilians and their Relationship with Money,” in 2021 nearly 84% of the population used cash; by 2024, that proportion decreased to nearly 69%. Conversely, 76% were using Pix. The percentage of individuals who rarely or never utilize cash grew to 68% in 2024 from 56% in 2021.
Not surprisingly, Google’s survey findings garnered significantly more media coverage compared to the more measured results from the central bank.
As occurs in many diminishing cash economies, the ability to use physical money is increasingly limited. Recently, it was announced that cash will no longer be accepted at toll booths along Brazil’s major BR-101 Sul/RS highway.
As reported in 2023, numerous legislative initiatives in the past decade aimed at curtailing or entirely abolishing cash transactions include:
The first proposal, introduced in 2016 by Deputy Gilberto Nascimento of the Social Democratic Party, aims to completely eliminate cash and coins. It suggests that all financial dealings should occur virtually, via applications and online platforms. This bill is currently under consideration by the Constitution, Justice, and Citizenship Committee.
The second proposal, presented by Paulo Ramos in 2020, prescribes a more gradual approach, advocating for the removal of the three highest denomination bills (R$50, R$100, R$200) followed by the phased withdrawal of all other banknotes and coins over two years. This initiative is under discussion within the Finance and Taxation Committee.
The third proposal, also from 2020, is handled by the Economic Development Commission. Suggested by Reginaldo Lopes, the current leader of the governing PT caucus in the Chamber of Deputies, it proposes setting a deadline for total elimination of cash, mandating that all transactions thereafter occur exclusively in the digital realm.
Notably, the second and third proposals emerged just months before Brazil’s central bank began progressing toward the introduction of its digital currency, Drex, set to launch next year. Interestingly, the central bank recently abandoned the blockchain component of the Drex project due to scaling and privacy challenges, with security concerns also influencing this decision.
An Epidemic of Digital Fraud
Much like cashless Sweden, Brazil is currently facing a surge in digital fraud. The nation’s rise as a fintech hub has attracted numerous cybercriminals, as reported by The Economist in January. El País has indicated that Pix is contributing to an alarming increase in digital crime, with approximately 1,640 mobile phones stolen every hour.
The target is not merely the device itself but rather the applications, contacts, and passwords stored within, which have proven lucrative for Brazil’s criminal organizations. Victims, on average, lose about 1,500 reais ($275, a little over the minimum wage) plus the cost of their stolen smartphones.
The public costs are escalating. Similar to digital fraud incidents in Sweden, the financial losses from these scams burden only the victims. The Brazilian Forum of Public Security estimates that damages from digital fraud reached $34 billion last year. This total surpasses the yearly expenditure on public security by the Brazilian central government, states, and municipalities combined.
Security vulnerabilities were underscored dramatically in July when a group of highly skilled cybercriminals hacked and drained the central bank reserve accounts of several financial institutions. By obtaining access codes through a third-party provider’s employee, the hackers successfully pilfered more than 800 million reais ($148 million).
The central bank responded to the breach by temporarily suspending Pix access for numerous institutions, leaving millions of users unable to make transactions. This incident highlighted significant weaknesses in the IT security infrastructure of Brazil’s payment ecosystem, particularly among external private sector providers. The substantial hack also revealed one of the main risks involved with real-time payment systems: immediate settlement minimizes opportunities for error correction and fraud recovery.
