Brand of PIX, instant payment system developed by the Central Bank.
(Photo: Disclosure / Central Bank)

Break the limits of the financial system: this is the main objective of PIX, an instant payment service developed by the Central Bank (BC) and which will start operating on November 16.

The PIX promises – and must – promote a revolution in the current Brazilian financial system. Operations that today can take hours or even days should be completed in up to 10 seconds, regardless of the time.

The Central Bank's idea is to make the financial transaction as simple as sending a message via WhatsApp.

In order to guarantee a standardization and the immediate adoption of the PIX, the Central Bank determined mandatory participation in the system of all financial institutions with more than 500 thousand active accounts.

This cut includes both the large Brazilian banking institutions and the main digital banks – Nubank, Inter, Original, among others.

See below some questions and answers about the payment system that is already “in gestation”. The PIX should be available to the Brazilian public within nine months.

How will PIX work?

With PIX, it will be possible to carry out transactions between people, companies and government instantly, 24 hours a day, seven days a week.

The time to complete each operation should take a maximum of 10 seconds, according to the Central Bank. The expectation, however, is that ordinary transactions will be cleared in an even shorter interval of just 2 seconds.

These operations may be carried out with QR Codes or by means of “keys” – which are simple information from users, such as CPF, CNPJ, cell phone number or e-mail.

PIX will also allow, already in the version scheduled for November, the payment of fees to the Federal Government – such as passport issuing guides, for example.

To use the PIX, the payer and recipient must have a bank, payment institution or fintech account. This account can be a checking, payment or savings account.

What will the QR Codes look like?

One of the main innovations of PIX is the payment through QR Code. The BC has established two types of them: static and dynamic.

The static QR Code can be used in multiple transactions and will allow the definition of a fixed amount for a product or the insertion of the amount by the payer. For example, for a transfer between two people.

The dynamic QR Code will be used exclusively for each transaction and will allow the insertion of additional information, which facilitates commercial reconciliation and automation. It should be used to pay for purchases in general, such as in supermarkets and restaurants, or even to pay the public transport fare.

What changes for financial institutions?

All financial institutions with more than 500,000 active accounts – from major banks to major payment fintechs – will be required to join the PIX.

This means that the same service must be offered by each of these companies – be it on the smartphone app, internet banking or ATM.

Each institution will be free to set its tariffs, which should lead to increased competition. Consequently, the trend is for a more agile and cheaper service for the customer.

How will the PIX deal with the fintechs?

By imposing a standard on the entire national financial system, the PIX is yet another element that shortens the distance between fintechs and banks, placing everyone on the same level.

This standardization should also facilitate the entry of new actors in the system, increasing competition. Business opportunities should also arise from this new scenario.

This more competitive environment, in fact, is one of the Central Bank's bets to encourage innovation and lower the costs of the Brazilian financial system.

What is the change for the customer?

Customers will now have the option of instant PIX payment among the possibilities of making a transaction – either via electronic means or by informing the “keys”.

As all the main institutions will be obliged to offer the PIX, but each one will be free to charge what they want for the service, the tendency is that there will be a reduction in bank fees.

At the same time, with instant payment clearing, procedures that depend on this confirmation must be streamlined. Among them are purchases made through e-commerce, the reconnection of a service such as water and electricity and the payment of fees to the Union.

How are TED and DOC?

With instant payments, two of the most famous banking operations, TED and DOC, will become increasingly obsolete and will fall out of use. It does not mean an immediate end, but they will be gradually replaced by the new service.

Will money, card, check and boleto run out?

As in the case of TED and DOC, financial transactions involving physical money (bank notes and coins), plastic cards (especially for debit), payment slips and checks tend to become more rare as the PIX becomes more popular.

It is very likely that the paper money and pennies in your wallet today will become collector's items in the not too distant future. However, it is worth taking into account the great geographical, cultural and economic disparity in Brazil before "decreeing the death" of most current forms of payment.

Credit cards themselves, for example, should continue to be used, but inserted into digital wallets – increasingly popular thanks to the momentum generated by the fintechs that offer this product.

What else is coming?

In addition to the features that will be available in November, the Central Bank said that others are already on the radar and should enter the PIX at some point. One of them, already anticipated by the institution, is the approach payment method.

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