Bank of brazil announces new payment system to compete with crypto
PIX will undergo its soft launch this November and may compete with the local crypto industry
The Central Bank of Brazil has announced that all banks across the country are to implement new banking infrastructure to process cross-platform transactions. The new Instant Payments (PIX) system is expected to have its soft launch sometime around November 2020.
Under the present system, transfers can only be processed on workable weekdays from 8am to 5pm. Each transfer will cost anywhere between zero to 16 Reais and users may experience a delay that lasts for days before it appears in their account. This depends on the method and the bank chosen.
Veja, a Brazilian news outlet, estimates that the country would be able to save at least 19 billion Reais after the implementation of PIX.
“The lack of cost, combined with the simplicity and speed of the transaction, indicates that the PIX will have a significant impact on banks and card payment processing companies. It is estimated that these two sectors will lose about R$19 billion in revenue per year.”
While PIX will initially require its users to have access to the internet, the Central Bank of Brazil is already studying possible formats that can allow the system to operate without connecting to a mobile network, such as the use of a QR code stored on the phone.
Once PIX goes public, many believe that cryptocurrencies could lose their appeal as a means of payment. This could stagnate the growth of the industry within the country, as Brazil has not yet developed a Bitcoin culture, and cryptocurrencies are viewed more as risky investments than as means of payment or a potential store of value.
The Director of the Central Bank of Brazil, João Manoel Pinho de Mello, explained that there are some steps that they have taken, as well as changes in the local market, to help guarantee the success of the system. One includes the mandatory sign-up of 34 institutions with more than 500,000 registered accounts to opt into the system.
Another is a change in the banking habits of Brazilian residents since the onset of the pandemic. Research released by the consultancy firm, Bain & Company, indicates that 44% of the economically active population made their first online banking transaction through their mobile phones since lockdown. This means that there is a higher chance that PIX will integrate easily into the local community since more people are already used to online banking.