In today’s world of finance many institutions, companies and individuals are looking for instant solutions. In Brazil, a country that has more than 58 million personal bank accounts, efficient financial accessibility is vital especially as more and more financial interactions are conducted digitally,
In November 2020 Pix, a new instant payment system from the Central Bank of Brazil, was launched. But what actually is the Pix system? Why was it created? How does it work? And what are the benefits to using the Pix system?
Below we’ll be exploring everything you need to know about the Brazilian Pix system including:
- What is the Pix system?
- What is a Pix key?
- How does the Pix system function?
- What are the benefits of the Brazilian Pix system?
- How can you send money home
What is the Pix system?
“Pix” is an instant payment system created, maintained and managed by the Central Bank of Brazil (CBB). The CBB is the monetary authority of Brazil. During 2019, the CBB were looking for a way to improve Brazil’s financial ecosystem and kickstart competition in the country’s banking industry.
Along came Pix - a way to quickly make payments and transfers. Pix is quite unique in the way it has emerged from the central monetary authority rather than a large tech conglomerate or startup. The exciting and novel nature of Pix has piqued the interest of many people around the world. Let’s delve deeper…
What is a Pix key?
Pix keys (chaves pix) are elements of personal information that function as an alternative to bank details. Your Pix key, which can come in various forms, can be used instead of a bank account number when you want to send money to Brazilian bank accounts.
A Pix key should be unique to the individual and you can use any of the following:
- A mobile phone number
- A randomly generated 32-digit code
- An email address
- A CNPJ or CPR number
After you have sent your money the recipient can ask for a Pix key from their bank and they can then connect their Pix key to their bank account.
How does the Pix system function?
Pix is the latest development in instant payments in Brazil - an electronic money transfer interaction that occurs in real-time and is available to users 24/7.
The whole thing is very simple. Users can select ‘direct to bank’ as their delivery method, enter the recipient’s information, which includes their Pix key, and send their funds instantly. No further steps required.
The Pix system is managed, maintained and regulated by the Central Bank of Brazil and seeks to address the digitalization of e-commerce and digital finance. Pix is different from a digital wallet because it is not a system that stores credit card information for users and it is not managed by private companies.
While the Pix system and digital wallets may use similar technologies such as QR Codes and NFCs, Pix is all about instant payment. Pix aims for financial immediacy rather than card or account information storage. And so far the introduction of Pix has been a success. By January 2022 Pix was being used by 71% of the population of Brazil and was generating a monthly volume of more than $100 million USD.
What are the benefits of the Brazilian Pix system?
Today there are well over a 100 million people who use Pix in Brazil to send and receive money instantly. Below we’ve highlighted some of the reasons why so many people are using Pix and what makes it a useful payment system:
- Free for consumers, cheap for businesses
Pix is free for any individual in Brazil to use and is therefore a great viable alternative to the many costly payment systems that consumers have been stuck with for years. While there are some fees for businesses, Pix still remains a very affordable and accessible system for businesses of all sizes.
- Safe and secure
Pix transactions rely on cryptography and robust authentication. As a result, the Pix system is as safe as wire transfers and traditional bank transfers. Over the last couple years one of the main reasons Pix has been used by millions of people is because they trust that it is a safe and secure way of handling their money.
- Available and accessible
Anyone with a phone can use Pix anytime of day anywhere in Brazil. This level of availability and accessibility is a great benefit for all the people of Brazil. Users no longer need to worry about waiting several business days in order to make or receive a payment. Pix is instant and always available.
Additionally, the Central Bank of Brazil is developing some extra features which will enable Pix to operate offline and for international transactions and payments.
- Powered by leading technology
Pix probably wouldn’t have been possible ten or fifteen years ago but today, with innovations in financial technology, it is far easier to create and maintain an instant payment ecosystem.
The Pix system caters to millions of people and is built on leading technology that is capable of rising to the needs of its users and adapting on the go.
- Cutting out the middleman
With lots of payment systems there is often a middleman that takes a cut and ensures that the process is unnecessarily slow. Pix cuts out the middleman because it does not require any intermediaries such as acquirers, issuers or card schemes.
To learn more about how Pix emerged check out this insightful article from BloombergUK “Brazil’s Central Bank Built a Mobile Payment System with 110 Million Users”
Send Money Home with Small World
Now that you know a bit more about instant payment systems in Brazil, you may be thinking about how you can send money home to your family or friends. This is where Small World can help.
Small World is an international money transfer service enabling millions of people to transfer funds to their loved ones around the world every day. We offer a variety of safe and efficient transfer services to Brazil including Bank Deposit, Airtime top-up, Anywhere pickup and Cash pickup.
We are also partnered with a number of local Brazilian banks including Itaú, Bradesco, Banco Rendimento, Connect Plus, Caixa, Banco Do Brasil and many more.
Your first digital transaction is always free of transfer fees!