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Brazil’s central bank built Pix – the new ATM

Pix, a system that allows fast money transfers via smartphones, has become ubiquitous in the 11 months since it was launched by Brazil’s central bank. All it takes to send someone cash  is a simple key they’ve created, like an email address or phone number.

Similar to the proprietary Zelle in the US, Pix works through multiple applications from banks and other digital wallet services. It has already been used at least once by 110 million brazilians while about 89 billion dollars have been traded through the network. In fact, Brazil now records more direct transfers than the US.

With businesses closed during the pandemic, cash use at points of sale fell by 25% in 2020, according to a report by tech consulting firm FIS. A typical work soared, accounting for 80% of the new jobs added to Latin America’s largest economy in the first 3 months of 2021.

Pix has made digital payment for citizens almost as easy as using banknotes. Carlos Eduardo Brandt, Pix’s head of management and operation, said the public’s reaction was expected and the size of the companies that took advantage of the system pleasantly surprised them.

But fast digital money has some of the risks associated with cash. For example, a common crime known as “express kidnapping” is the practice by which criminals grab victims, take them to an ATM and force them at the threat of a knife or weapon to raise the maximum amount possible.

Pix, as it seems, is the new ATM, since robbers don’t bother to drag a man up to the ATM and simply force people to transfer their savings through an app. Although transactions on Pix are traceable, criminals may sometimes use accounts with the names of others.

So policymakers in August added a few safeguards, similar to those applied to ATMs, such as limiting the amount one can carry at night when such attacks are more frequent.

In July, Pix broke its own record of 40 million payments in one day. Most of these were transfers from person to person. For example, Renata da Silveira Pires, owner of a small cat care business in Águas Claras near Brazil, reported that instead of having accounts with many different banks, so that its customers do not have to pay the fee to send money to another body, recommending 30% of the cost of a visit and and burdening them, in this way as long as they have only one account.

Entrepreneurs will therefore receive payments immediately instead of waiting for the banks to open. One of the goals of the Central Bank of Brazil at the launch of Pix is to put more people into the official financial system. The infrastructure is capable of covering all the needs of society, but Pix alone is not enough. Brazilians still hold a bank account or use a payment service, although 30% still do not.

With the acceleration and simplification of payments, banks and fintech companies are pushing for innovation and new, more affordable services for benefits. In recent years, fintechs like Nubank have even attracted customers away from traditional Brazilian banks, which is targeting a first public offering that could give it a market value of 55 billion dollars. At the same time, initiatives like Pix make payments more efficient, especially for those who already have bank accounts.

However, achieving the economic integration of the population as a whole is a completely different thing, according to Liliana Rojas-Suarez, director of the Center for Global Development, based in Washington, D.C.. This is because the countries of the region also have to deal with costly regulation and the low confidence of citizens in general in the financial system.

Brazil is still a fairly fertile ground for digital payments given that Brazilians spend more time on social media than in any other country in the western hemisphere, having the fifth largest online population, according to GlobalWebIndex.

Pix already has competitors, a new Facebook-owned payment service via WhatsApp. At the same time, the central bank plans to further expand Pix’s reach. It will soon offer ways for users to make payments without having to be connected to the internet. Finally, she works on international money transfers, as well as allowing cash to be received by retailers as an alternative to ATMs.

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