Loved by Brazilians, instant payment system PIX is becoming a headache for banks

RIO DE JANEIRO, BRAZIL – For years, Brazilian banks have been cashing in on hefty transaction fees. That is (almost) over now. But debit and credit cards are also in danger of being overrun by PIX.

PIX, the new instant payment system launched by the Central Bank (BC) last year, has already played its way into the hearts of Brazilians because it is convenient and because it is cheaper than the traditional TED and DOC transfers and payments.

According to BC, the new system has quickly gained public acceptance and has seen strong CMGR (weighted average growth) in both money volume (over 50%) and number of transactions (over 60%) since November.

According to a report from XP, it’s not news that using PIX for transactions would change the market, but the pace it has maintained is outstanding.

“PIX has experienced strong growth in its use as a remittance tool, surpassing TED in the number of transactions in January 2021, the number of boletos (payment receipts) in March 2021, and the use of both tools combined in April 2021,” said analysts Marcel Campos, Matheus Odaguil and Artur Alves.

According to the team, PIX could also be behind the decline in debit card usage in Q1.
“On the remittance side, we see the solid penetration of PIX as a negative factor for banks in general, especially for existing banks, as they have been charging R$10 in fees per transaction, even though the transaction could be free for customers depending on the number of transactions,” they say.

In the case of payments, they say the impact is less noticeable. Still, some of the fears may come true, “as the weaker debit card numbers could be signs of substitution by the new tool, which could threaten credit card lines in the future when PIX’s new features come into play,” they add.