PIX: The New Instant Payments System
June 04, 2020
Structure was developed by the Central Bank of Brazil
New technologies have encouraged the financial system to rethink its operations, especially due to customers increased demand for simpler, faster, safer and more economical payments solutions. While updated financial institutions use technology to optimize their activities and achieve better results, companies without innovation strategies will miss opportunities.
The Central Bank of Brazil’s efforts to reply to this challenge were consolidated into a syllable that you will hear many times: PIX. This system, developed by the Central Bank, will allow Brazilians to make and receive instant payments, electronic money transfers completed in a few seconds, at any time of the day and for any financial institution.
PIX will have a strong impact on the national economy and is an important initiative to bring an efficient way of managing financial operations. It also facilitates the inclusion of this technology on a daily basis, developing a more agile and competitive environment.
Working together with BluPay, a company of the group Valid, we keep updated with the latest releases and information, to develop our instant payments solutions. With this blog post, our goal is that you can learn more about:
- PIX and the objectives of the Central Bank of Brazil;
- PIX development;
- What will change with the PIX?
PIX and the objectives of the Central Bank of Brazil
Credit cards with no annual fee, cashback, e-wallets, apps for personal loans. How many times have you noticed these options when planning your budget? Many financial institutions started to bring more advantageous and inclusive solutions to a wide audience. Faster operations with lower fees, previously restricted to the fulfillment of many requirements (having a bank account, for example), became more popular.
The Central Bank found in this changing scenario the support to achieve one of its main objectives: the democratization of the financial system. Including new transfer and payment tools in Brazilians routine and having money circulating faster are some institutions’ targets.
To develop concrete solutions, a project was launched: LIFT, the Financial and Technology Innovation Laboratory, coordinated by the Central Bank and FENASBAC (National Federation of the Central Bank of Brazil Civil Servants Association). To aggregate more players, companies interested in sharing solutions with the financial sector also participated, improving the exchange of ideas.
PIX is the sum of an innovative attitude with the objectives of the Central Bank, bringing instant payments technology to the national economy, and money transfers faster, safer and more economical.
In the PIX development, the Central Bank considered the main concepts and technologies of instant payments, like Open Banking and QR Code, and its competence to consolidate information about the main financial institutions in the country.
Which financial institutions can participate?
The Central Bank structured its instant payments ecosystem, classifying the participants considering their actions and requirements.
Direct participants are the financial or payment institutions that have an account with the Central Bank. Usually, banks with higher revenue or a total of customers. Institutions with, at least, 500 thousand active accounts (considering demand deposit accounts, savings accounts, and prepaid payment accounts) must join the PIX.
Indirect participants do not yet have an account with the Central Bank and need to interact with direct participants to register their movements on the main platform, entitled settlement infrastructure.
Payment initiation service providers are also integrated. This new process should be supported by the fintechs, who will be responsible for connecting the customers’ payments to the financial institutions, even those in which the customer does not have an account with it.
This classification format is not to split, but to join efforts, so every participant can contribute to the development of instant payments solutions and its many opportunities.
How did the Central Bank of Brazil partnership with companies start?
Many of the main conversations with companies interested in improving the financial system were at LIFT. The Central Bank coordinated a selection process of companies and projects, and fintechs from different areas (infrastructure and credit, for example) registered to join. The highlighted projects were approved to participate.
The dialogue between the Central Bank and the companies was intensified in the LIFT. Therefore, products in development already considered the requirements established by the institution, facilitating the integration with PIX. The estimated date for instant payments homologation start is November 2020.
What will change with the PIX?
PIX launch is an excellent update for many players. Somehow, almost everyone who makes or receives payments has advantages with it. An inclusive and less bureaucratic system, with increased speed and lower fees, developed to streamline financial operations and support the economy.
So, PIX is a Central Bank of Brazil app?
No. PIX is a system that will make it possible to accomplish instant payments in Brazil. It will be integrated with fintechs, banks, payments and financial institutions apps, and its operations will bring more competitiveness to the sector.
Some improvements include easier money transfers between people, invoices payments, reduction of administrative expenses and better communication between accounts of different banks and companies, 24 hours a day, 7 days a week.
We understand how important this is to the economy, and we are very enthusiastic about it. BluPay is a LIFT participant and, in March, on LIFT Day 2020, presented an instant payments solution, already adapted to the PIX. BluPay’s target is to bring the advantages of this new technology to companies, entrepreneurs, banks, and customers.
Visit BluPay’s blog to read more information about instant payments and BluPay solutions: www.blupay.com.br
Original article can be found here.