Pix surpasses credit and debit card transactions in Brazil
philaverse.substack.com
philaverse.substack.com
1 - you register your keys with your Bank, and it communicates the Central Bank. It can be your "ssn", your phone number, your email or some random id.
2 - to pay somebody, just provide the key. Your institution will look up in the Central Bank database who'll be paid with that key (the destination: Bank, account number)
3 - your Bank withdraw the funds from your account, the destination Bank deposits it (there's a tight time limit), the Central Bank does the compensation among banks.
4 - there's no disput: once you authorized it in your Bank, it's done.
If your Bank provides you with credit, it's a commercial relation between you and your Bank. Pix is just a transfer from your balance, it doesn't involve credit lines and so on.
So, in the end it's simple: money transfer with tight rules made by a Central Bank and obligatory adoption from all Banks.
The keys are the most relevant aspect to the clients: your phone number, your "ssn" ( In Brazil it's called CPF and it's public, it's not a secret number). Just like WhatsApp made it easy by using phone number instead of some login.
We in Switzerland didn't get that lucky. Instead we have a new middle man Twint (partially owned by the banks?) which charges much higher fees to merchants than the credit card companies did. P2p is free which they claim is paid by the bank fees but p2b is of course not. When being pushed why their fees are so high they give you the run around. Of course again the perfect racket because the end customer doesn't know about the fees, they just want to use the app and if as a merchant you don't accept this payment method you loose the business.
Because of the fee you also loose usability for the P2p payments. P2b payment is done via qr code, they do everything to prevent you from being able to do a p2p payment with a qr code as it would allow businesses to do p2p payments instead of p2c. For p2p you need to enter someone's phone number or IBAN even if they are standing right next to you.
Many banks, specially the neobanks/fintechs are making it free for small business tho.
I have a business to sign contracts for soft dev and I was charged once for a pix transaction between another business account on a different bank.
That bank is not my primary anymore, I started transferring using the old system (TED) to avoid it. TED takes ~15 minutes (from 0800 to 1700) instead of <1 sec (24h/7d), so not a big loss for internal transfers.
Still using the dumb bank because of other reasons, but not primary.
So competition working as intended in this case.
For debit payments, sure. Credit card payments have infinitely better fraud protection than Pix (which has none), though.
Kinda spoils the whole effect of a headline like "$FOO surpasses credit card institutions". It'd be news if it didn't.
That being said, this is probably the best way to move forward with digital payments - if it's under control of the government then:
1. The middlemen are cut out.
2. It only needs to make enough money to sustain itself, not provide profits to shareholders.
3. You can't simply silence people you don't agree with. You can't simply say "we're not allowing parties who don't follow our ideology to perform transactions". Any party who is now not allowed to do transactions by the government were also previously not allowed to do transactions.
That being said, I cannot see the major Western governments adopting this approach. Firstly, there's just too many benefits to citizens at the expense of the politicians "lobbying" income, and secondly, governments like being able to shut down certain parties. With Visa/Mastercard they can simply ask Visa/Mastercard to stop transacting with that party and there's no recourse for that party.
When the government itself wants to silence that party, their are many more hoops to jump through, and there is still legal recourse.
Not necessarily. The banks are required to implement it and provide it as a service. The real win of the system is actually how good it is, and how in some instances it's better than using cards.
These days, whenever I'm there, I favour Pix over cards whenever I can. To me personally, it's not only more convenient in some cases (and the only option in others) but it's also a way of avoiding sending data and money to the likes of Visa and MasterCard.
Argentina has adopted the system to attract Brazilian tourists as well, which means as a Brazilian you can get away with a lot there even if you don't have an international card.
Do you know how fraud is handled (or maybe it’s better mitigated)?
For instance in one of them I can add trusted accounts for unlimited amounts (it takes a random time from 24 to 48h to get it through), for all others I have a really low limit for transfers between 8pm to 8am and a bit bigger for daylight.
Another bank added location detection with gps through the mobile app and I can add the trusted places to make bigger transactions.
Let's say I want to buy a car.
I can immediately transfer for instance US$ 1000 as a signal of intention, add the car seller as a trusted account, and wait 48h to transfer the rest.
In the worst case, If I get abducted by a criminal my bank app mandates the gps to be turned on for any movements. If my family moves fast enough with authorities this can help locate me, and also coordinate with the bank means to monitor the account.
On the other hand some abduction criminals are settling with smaller values to move fast and not get caught, but in these cases they will do some gross mistakes. The problem is the police forces doing more mistakes than the criminals.
For frauds without physical contact, it increased the amount between elders, but at least in my family we came up with a strong framework to check with someone like me that is more digital literate to provide some "consultancy" to the elders.
My dad for instance had a extremely high limit because the bank manager did a mistake, even on a traditional private bank account. I talked directly to the manager explaining that her actions were against the own bank recommendations.
And oh, this is not different from the past were the elders were compelled to give money in physical form, with elders hiding this from the family for some reason.
The amount of scam in my family is stable for now between the old way versus the new way.
The thing just moved faster (it took few hours for the rest of family to find out), but safer (the elder in question didn't need to physically handle the money).
It worked well as a cautionary tale.
How does recon happen? Is there a float maintained at the central bank for each participant bank?
What is the API Access scene like (say for a business building out a payment gateway)?
What's the commission like? (Is it taxpayer subsidised?)
Direct API access to the Central Bank's internal system is only given to participating banks. Your bank might make available a separate API through which you can generate temporary QR Codes with a value attached, for instance. This is very common. These QR codes aren't requests for payment in the strictest sense, because they aren't targeted at an user specifically: anyone that scans the QR code can pay.
To popularize the system, the central bank forbid the banks from charging for transactions in the first 12 months. That was very contentious because before we had a system called TED which allowed transactions only in business days and within a 1~24h window. Most (not all) banks charged a fixed fee of 1 to 15 BRL per transaction. This revenue source was cut all of a sudden.
Now, they allow banks to charge fees for businesses, if they wish. Some banks have fixed fees, some charge up to 1% per transaction (half the fee for debit card transactions in Brazil), sometimes also defining a ceiling (max 130 BRL fee per single transaction).
But what I don’t see people talk about are the other motivations (other than no fees compared to credit cards)
The last number I remember is that around 30MM Brazilians did not have bank accounts. There’s a large amount of “informal” work that happens in the country where people just get paid in cash. Pix is an alternative to that. It incentivises people to get a bank account.
My tin-foil hat alter-ego can’t help but think that this helps the central bank have more oversight of where the money is going. And the central bank does share data with our “IRS”. That’s probably a good way to find people that should’ve been paying taxes and aren’t.
For example, say there’s no income tax on incomes below 30k a year, and the first tax bracket is 20%. The moment your earnings go to 31k you’ll net less money than someone making 30k because the 20% is applied to all 31k.
This obviously has a pretty negative effect on low income families.
First 30k tax free.
1k 20% tax.
https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto...
I stand corrected, thanks for. the info!
https://www.gov.br/receitafederal/pt-br/assuntos/meu-imposto...
https://www.epcontabil.com.br/blog/tabela-do-irpf-de-1994-a-...
I still remember the surprise when I got my first salary raise and it bumped me from the 20% bracket to the 27.5% bracket and realized I was making less money.
It took me another raise to break even.
Or am I misremembering? Maybe it's taken from the payslip, but returned with the yearly adjustment (which could make sense)
You might get the difference back when you filed taxes? I’m pretty sure my payslips discounted 27.5% though.
And yeah, I also miss 27.5% tax. Ireland’s 52% marginal tax rate makes me sad every time.
OTOH, we don't have to walk through someone's living room when going to work, or buy candy from kids on traffic lights.
Equality has a price I'm more than happy to pay. I still remember how rare a sight kids selling candy on traffic lights was in the mid 2000's and it crushes my soul to see that again when I visit my family down there.
And I say this with confidence, because Brazilian tax brackets work progressively, and have worked like that since always, just like every other sane country out there.
Please stop spreading misinformation.
It's not a credit line so it has all the disadvantages of debit cards. It's also fully government controlled which is just stupid especially in a country like Brazil which has a known history of abuse of power with good and bad intentions.
There are numerous reasons to prefer physical cash to all other forms of money but nobody cares because pix is easy and convenient. I bet people will suddenly start caring a lot when they finally start taxing it. By then it will be too late since it will be too entrenched in our society to use anything else.
> Our government is terrible, but our central bank is actually quite competent. Credit to where it's due.
I agree. The cause of the greatness apparently is apparently its autonomous nature. Somehow it manages to avoid answering to the rest of the government. Central bank setting high interest rates despite extreme political pressure is probably the only reason this country is still afloat.
Pix is so well designed and nice to use that sometimes I wonder how it exists. It’s one of those futuristic things we could only dream about a few years ago.
You seem to be conflating the two. :)
There is no tax for Pix transactions. Some banks may charge a fee from businesses.
Anyway, many banks don't charge fees on Pix for business accounts, which they could, due to competition. Also, for small, individual merchants/professionals (“MEI”, in Brazilian lingo), Pix is entirely free (from fees and taxes).
That's why the sibling thread wasn't making much sense to me. :P
I should learn to check usernames before responding.
Are you talking about the existing B2B fees that some banks choose to waiver, or are you talking about a hypothetical future tax on pix transactions?
CPMF was (allegedly) created as a token for customs and the central bank to monitor financial transactions. With Pix they have that "out of the box" so it would be harder to justify.
Disclosure: I'm heavily invested in crypto and payment processors, and this payment system sounds awesome!
> then why don't we all start Pix in our countries?
Good question. Maybe some inter-bank tech is already in place in some countries that make it easier/harder.
I've been repeatedly told the Banking system in Brazil is top notch and an early adopter of many innovations. (I have also been told that this is because banking fraud and security are entangled in a very fast-paced arms race)
Maybe its just matter of time. There was a (top) post in HN about how the Fed was starting something that I _think_ is Pix in the US.
I'm not familiar with Pix but from what I've read, it's similar to India's UPI. There are only two real problems with UPI:
1. Card networks have standard dispute resolution process which often involves a temporary credit while the investigation is ongoing. Disputing UPI transactions on the other hand is painful.
2. Banks don't make any money on UPI transactions. And with UPI credit transactions, they are basically giving people interest free loans. And considering there are no transaction fees, this is open for abuse.
Of course, it is possible there might be some bank offering a pix-enabled credit card, but I don't see how they'd have any incentive, precisely because people could start doing that.
The UPI over credit card is primarily there for peer-peee merchant transactions...
Nope. Signing up as a merchant is simply the matter of downloading the business version of GPay or Paytm and submitting minimal KYC documents.
> peer-peee merchant
Did not understand this part.
I think you were talking about registering as a peer-merchant, not a "proper" merchant! MDR etc cannot be charged on peer-merchants[1], and are essentially peers, but with restricted purpose codes that they can accept money for.
[1] https://www.npci.org.in/PDF/npci/upi/circular/2019/Circular%...
FedNow just launched. Interac has something similar (but not identical) in Canada. Faster Payments in the UK. SEPA payments in the EU. NPP in Australia. UPI in India. Much of the world has had a comparable solution to some extent for a while now. Most of this materialized over the last 10 to 15-ish years.
Really the US was the main laggard and that's over now.
Pix is great as a payment method for the average person, you use it to split a check and pay for your Uber, but big money still flows mostly via TED and other means.
I'm far from an expert or even knowledgeable about finance related matters, but isn't one of the things HN (in general) fearful of with respect to CBDC's the centralization aspect with the government. How is this any different, if any?
As for why it doesn't exist in every country: it takes a bit of technical work to get the system working and governments move slowly, for better or for worse.
[1]: https://en.wikipedia.org/wiki/Unified_Payments_Interface
If you're in America then the latest entry is FedNow.
It's almost certainly a bean counter making that decision - and it's theirs to make - not due to some kind of technical inability to make 3DS work. The US is a low fraud rate market that values faster/easier transactions at point of sale over lower absolute fraud, almost certainly because it maximizes total profit.
Generally, a no-fraud environment isn't optimal.
Japan has PayPay which is a privately operated system
And while personally I'm going to be affected by their change in credit card rules, everyone I know uses it with cash to get in on their gatcha mechanics. Everyone is surprised when my payment doesn't have the "roll" to see if you won anything.
The reason a lot of countries don't do this is likely private merchant or banks lobby.
PayIDs weren't available to businesses when last I looked, for whatever reason, but I think the Eftpos network also uses the NPP. So you can certainly use this network to make payments to business, but you need an EFTPOS card, and most of the banks issue Visa or Mastercard network cards instead.
Regulatory capture?
The only difference being that it is run by a private bank, Kaspi, not a central bank.
But only for selected products. It's easier and more manageable than my bank credit card rewards.
Also many services like doctors, vets, etc are much easier to pay.
The only upside of CCs are rewards and cashbacks, but if they add too much rules, and exceptions for it, pix becomes the clear winner for the transparency on my expenses.
So even for people on middle to upper middle class it can have more benefits.
Small business doesn't have to pay for anything but a piece of paper with QR code printed on it.
As of other benefits, this system is much younger, I hope it'll improve with time. I try to use it more often, although actually it's still faster to use the card compared to unlocking the phone and unlocking the bank application to pay with the QR code.
You will sometimes see "convenience fees" to use a card for large payments, which is equivalent.