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Contxto – The Central Bank of Brazil is shaking up the fintech scene of Latin America’s largest country. Last Wednesday, it announced it would be launching its own payment solution that uses QR codes to process transactions.
This system—christened the Instant Payments Platform or PIX—will be available in Brazil from November of this year.
One of its most attractive features is that all transactions are settled immediately. And that’s regardless of the date and time, or if two users have funds in different banking or financial institutions.
Related article: Banxico rolls out CoDi pilot for cashless QR and NFC payments
Brazil’s fintech bet
To use PIX, a user needs an account whether it’s with a bank, fintech or valid payment institution.
Small and medium-sized enterprises (SMEs) can benefit from this platform as it gives them the opportunity to offer customers electronic payments. That could boost their sales in the process.
But, for the government in Brasilia, it stimulates the rise of new businesses and cuts down the use of cash.
“This initiative, in line with the ongoing technological revolution, enables innovation and the emergence of new business models and promotes the use of electronic payments, reducing operational risk and the difficulties related to the use of cash,” stated João Manoel Pinho de Mello, Director of Organisation for the Financial System and Resolution at the Central Bank.
Distribution and breaking down barriers
From the looks of PIX, it’s very much like Mexico’s CoDi (short for Digital Charge or Cobro Digital). This payment system was launched by the Mexican authorities in September of last year.
Both are government-developed solutions designed to encourage electronic payments, increase the number of people with bank accounts, and reduce the use of cash.
In short: promote financial inclusion.
And it’s likely PIX faces some of the challenges CoDi is currently dealing with which are primarily two inter-related matters.
The first is developing an effective top-down approach to distribute PIX among its population.
Meaning, besides the government’s task of getting traditional banks on board with it (they’re probably thrilled), there are other stakeholders in play. Among them are fintechs, retailers and small businesses. But above all else, are individuals that need to be educated on its use and the benefits it can bring. That of course, conveys a big effort.
And second, it also implies the need to break down misconceptions about electronic payments and reassure users on the security of processing transactions through PIX.
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