Simply the Best

Pix real-time payments

Feb 27, 2025

More than a decade ago, a senior executive at a big bank in Brazil told me that encouraging financial inclusion was proving impossible. His bank had a large number (30m+) of low-income customers mandated to have a bank account to receive government benefits. As soon as the benefits arrived in their accounts, almost all account holders went to an ATM to withdraw their cash and then queued in a branch for any residual amount the ATM was unable to dispense. No amount of innovation, including on mobiles could change consumer behaviour and their preference for cash.

Fast forward to today and all has changed.

The Central Bank of Brazil (BCB) launched Pix in November 2020, resulting in probably the fastest adoption of a payment system anywhere in the world. It has 157m individuals registered to use it, or about 93% of the adult population and 15.4m companies1. In 2024, four years after launch, it processed 56bn real-time payments, or 266 payments per capita2.

Two weeks ago, I wrote3 about the rapid rise and extraordinary success of UPI payments in India – however, Pix’s growth has been even more rapid and outpaces UPI by far.

For comparison, in its fourth full year after launch (2016), UPI processed 19bn payments, or 13 payments per capita. Last year, eight years after launch, UPI processed 172bn payments4 , three times the absolute volume of Pix in the same year, but at 119 payments per capita, less than half that of Pix. Figure 1 shows the difference.

Figure 1 – comparison of UPI and Pix payment volumes per capita

Evidently, to achieve such strong and rapid product-market fit, the BCB must have done their homework on what works well in the world’s real time payment systems before designing Pix (see footnote 10 for the full story).

How Pix Works

Pix is a real-time payments scheme, operating on the central real-time clearing and settlement system, SPI that operates 24/7. All banks and payments institutions in Brazil with more than 500,000 accounts must offer and receive Pix payments.

Each participant has their own online or mobile banking or payment app which is used to make Pix payments, following a standardised user interface and user experience defined by the BCB.

A core component of the Pix system is the Transaction Accounts Identifier Directory (DICT) which holds an encrypted identifier, or alias for anyone or any business that wishes to receive Pix payments.

Individuals and businesses can choose their own identifiers to share with Pix users to get paid. Up to five aliases (keys) per account are permitted (that must be unique to an account but are portable to other accounts) or 20 aliases for accounts of legal entities. Aliases used can be an e-mail address (15% of a total 828m aliases as of January 2025), a mobile phone number (18% ), a Taxpayer Identification Number (19%), or a randomly generated alphanumeric string for privacy (48%).

When paying a recipient, the payer either keys in an alias for the recipient (42% of all initiations); captures an alias through a dynamic QR code (38%) or static QR code (8%); or manually keys in payee account details (12%). QR codes are used extensively at point-of-sale, on invoices and online for ecommerce.

The alias is decoded against the DICT and the recipient’s name is displayed to the payer to check it is correct before paying. This helps prevent misdirected payments and fraud. Typically, users can report any fraudulent aliases they encounter directly to the BCB through their payment apps. Payers are authenticated in their app by their bank or payment provider, who then authorises the payment.

Pix Participants

There are 903 Pix institutions connected to SPI through a private communications network, including the government and 884 transaction account providers, with 186 direct participants and 703 indirect participants. Most of the participants are credit cooperative banks which operate mainly in rural areas, 582 in total, with 73 banks of varying sizes and 175 payment institutions, the remainder being an assortment of other FIs (see footnote 2).

Brazil has some very large banks e.g. Itaú Unibanco with 99m customers, Bradesco with 71m and of course the hugely popular Nu (previously Nubank), a 12-year old neobank, with 102m customers in Brazil5. There are also some large payments Fintechs such as Mercado Pago and PicPay who allow their customers to make and receive payments into their digital wallets without needing a bank account.

There is no information I can find on the relative shares of Pix payments between banks versus non-banks. Pix payments are made from the online/mobile banking app or digital wallet for an account, so I expect that the share of payments between the 884 transaction account providers is broadly in line with their share of deposits.

This is unlike UPI in India, where a bank account may be registered with any non-bank digital wallet to make payments, allowing the more popular non-bank wallets to dominate (non-bank digital wallets account for over 97% of UPI payments, led by PhonePe - 48% and Google Pay - 37%, leaving Indian banks with less than 3% combined share).

Uses and Impact

Pix is used for all types of payment, in person and online, including from invoices - person-to-person (45% of payment transactions), person-to-business (42%), business to-person (9%), business-to-business (4%), person-to-government (0.3%) and business-to-government (0.1%). The BCB has designed Pix for this ubiquitous use from the start and is steadily adding new capabilities to widen it further – this year, BCB is launching Pix Contactless for contactless mobile payments in store without opening an app, Pix Garantido to split purchases into installments and Pix Automatico for regular bills (e.g. utilities) and subscriptions.

Debit cards and credit cards are widespread in Brazil and have been for many years. Up-to-date card statistics are hard to come by, but there were 167m debit cards in issue in 2020 and 184m credit cards in 20236 - in fact, Nu’s original success was based on its enormously popular fee-free purple credit card and mobile app.

Therefore, Pix has had to compete with an established cards infrastructure and culture, including widely used card features such as “10X sem juros” – “10 installments, no interest”, which makes its success even more remarkable (whereas in India, card usage is low and UPI has grown without strong card competition).

A local report7 states Pix accounted for 39% of transactions in 2023 and cards 41% (I assume the remainder being made with cash and the long-established Boleto payment mechanism). It is very likely that Pix transactions exceed card transactions now.

This is in line with the BCB’s expectations that credit cards will eventually disappear8, replaced by Pix payments through online/mobile wallets linked to credit accounts or overdrafts on bank accounts. Nu, for example offers this already through its Pix no Crédito (Pix on Credit) service.

However, the change in consumer preferences for Pix over cards has disrupted severely the business volumes of card acquirers such as Cielo and newer Fintechs such as Stone and Pagsecuro who have seen their share prices fall by 80%+ since 20219.

Fraud Protection

The risk of unauthorised fraud in Pix is low as all payments require authentication and authorisation through online or mobile bank apps or digital wallets.

Consequently, there is no chargeback mechanism to deal with unauthorised fraud. However, with volumes reaching 5bn payments a month, some degree of fraud is inevitable. Pix has developed measures to mitigate fraud risks and handle disputes including:

a. Pix participants are accountable for managing risks and are liable for fraud.

b. The BCB and Pix participants protect personal information associated with Pix aliases through encryption and measures to prevent scanning of the DICT directory.

c. Pix participants set limits for transaction values, based on customer risk profiles, including factors such as the time and/or day of the payment (payments can be limited at night to deter crime), account ownership, service channel and user authentication mechanism.

d. The ability for Pix users to reduce the limits established by their account provider (or request for increases, subject to approval).

e. The ability to implement short delays in Pix authorisations so that account providers can verify with extra checks unusual transactions with a high risk of fraud.

f. An information centre and database for all Pix participants to share information about Pix aliases and account numbers used in fraudulent transactions, against which every Pix payment made with an alias is validated.

g. Restriction on dynamic QR Code generation, allowed only by participants registered to do so with the BCB.

h. The ability for account providers to block funds and return them to the sender in the case of fraud, including precautionary blocking and a special return mechanism - Mecanismo Especial de Devolução, designed for account takeover fraud and scams. The victim's bank can request a refund from the recipient's bank if fraud is detected within 80 days of the transaction. The recipient's bank has seven days to respond, freezing funds if needed.

i. A voluntary refund mechanism for payments sent in error, with some banks offering one-click refund options in their apps.

j. Banks and payment account providers are obliged to assist customers in disputes over a Pix payment or a purchase made with one. If necessary, consumers may escalate disputes and complaints to the consumer protection agency, Procon at the BCB.

Lessons from Pix

Pix provides useful insights on how to design and implement a modern real-time payments system to achieve product-market fit with rapid mass adoption:

A strong brand is essential - like iDeal in the Netherlands, Swish in Sweden, and Venmo in the USA, Pix is instantly recognisable and has become a verb for paying.
Building an all-in-one payment solution works – the BCB designed Pix to maximise its utility and versatility to work for all types of uses - individual, business, government and for multiple payment options: QR codes, payment links and direct transfers, in-person and online.
Common user experience standards are needed for all account providers to ensure a seamless and viable payments experience, especially for in-store payments – the BCB has these stipulated in the Pix rulebook.
Pix is another example of digital payments presenting an ideal opportunity to build homegrown payment services as an alternative to international card networks - it took under two years to launch Pix after the requirements were agreed in December 2018, and the actual work from the start of development to launch took just 13 months10.
Mass adoption can be achieved by mandating all banks and payment account providers to use a payment system, provided it is superior to existing alternatives. Pix’s real-time payments and 24/7 availability have been a major factor in its adoption.
Using the payment system for government benefits can accelerate public adoption.
A digital payment system usage is maximised by enabling it to work with or without a bank account – 93% of Brazilian adults use Pix, but only 84%11 are banked.
A payments system’s utility is increased by allowing all who use it both to send and receive payments, like cash but as an alternative to it (and unlike cards where to receive a card payment requires extra acceptance capability and cost).
In a cash-intensive economy (as Brazil used to be), a payment system needs to work seamlessly with cash to help the population transition to digital payments - Pix has a cash withdrawal facility, Pix Saque allowing withdrawal of cash from a cash agent or ATM and a facility, Pix Troco for cashback when making in-store purchases. In the 12 months prior to the Pix launch, a large proportion of the Brazilian population had never before made an electronic payment (see footnote 10 p.9), now 93% of adults in Brazil use Pix.
Operating costs can be kept to a minimum by removing the need for intermediaries. Pix can be used for sending and receiving payments by anyone with just an app from their payment account provider. Technical intermediaries may be needed for more sophisticated uses, for example integration with point-of-sale devices, in-store systems, CRM systems and ecommerce websites, but no payments processing intermediaries are necessary in the Pix payment flow (although Pix does have an open finance facility for payment initiation service providers to initiate payments within ecommerce apps).
A universal addressing system makes it easy for all users to route payments and verify their destination without needing bank details – the DICT directory is an elegant solution that separates payment addressing from account identity and authentication (which is the responsibility of banks and payment account providers) while preserving privacy.
Users like to be in control – with Pix, a user of any type may set their own aliases and transaction limits (at or below those set by their account provider).
A new payment method that is easy and free for consumers to use and easy and cheap for merchants to accept, whether a sole trader or a large chain of stores, leads to the very strong network effects evident with Pix – its merchant fees (averaging 0.33% - see footnote 10, p.27), considerably lower than card fees (1.13% - 2.34%) have been a major factor in merchant adoption, particularly by small traders who otherwise would accept only cash.
Instant notification of payment confirmation by API to checkout systems has made Pix viable for in-store and ecommerce payments, while instant receipt of funds compared to up to 28 days for credit cards has boosted merchant adoption.
A lack of a chargeback mechanism is very attractive to merchants – Pix has none, eliminating chargeback fraud and costs.

Conclusion

Among real-time payment systems launched in the past decade, Pix in Brazil stands out for its scale, its rapid adoption and its impact on the economy, digital inclusion and financial inclusion. Together with other highly successful real-time payment systems accessed through online and mobile digital wallets such as UPI in India, it points the way to the future of payments globally.

Should other countries need an exemplar on how to design and implement such a real-time payment system and in a short time-frame, there is a growing number to choose from, but they should look to Pix in Brazil – it is simply the best.

Agenda: Payments

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