Brazil - PIX Instant Payment

This video details the development, implementation, and impact of PIX, Brazil’s instant payment system launched by the Brazilian Central Bank in November 2020. It provides insights into the system’s architecture, rapid adoption, key design principles, governance structure, and its role in promoting financial inclusion and transforming the national payment ecosystem. The information is valuable for understanding the practical implementation of large-scale Digital Public Infrastructure (DPI) and the factors contributing to its success, offering lessons for other countries developing similar systems.

Synthesized Summary

PIX is Brazil’s national instant payment system, developed and operated by the Brazilian Central Bank. Launched in November 2020 after a two-year development period [01:21-01:30], PIX allows users to send and receive money between accounts within seconds (typically around 5 seconds), 24 hours a day, 7 days a week, using simple identifiers like phone numbers or tax IDs via mobile apps [01:34-01:47, 03:04-03:31].

The system experienced significantly faster adoption than anticipated. Initially built to handle 2,000 transactions per second (TPS), capacity had to be tripled to 6,000 TPS within the first year due to high demand [00:07-00:28]. This rapid uptake highlights the system’s success and the importance of its highly scalable architecture [00:28-00:35, 15:39-16:11]. PIX quickly became the most used digital payment method in Brazil, surpassing even credit cards, with 77% of the population using it [02:17-02:21, 02:50-02:56]. It supports a wide range of use cases, including P2P, P2B (Person-to-Business), B2B, G2P (Government-to-Person), and P2G (Person-to-Government) payments, both online and offline [01:56-02:16, 12:23-13:06, 13:46-14:02].

A key design philosophy was adopting an open model using APIs, rather than a closed system. This was crucial for fostering competition, enabling innovation, and promoting financial inclusion [03:59-04:47, 05:06-05:12]. This approach allowed over 800 diverse participants (banks, payment institutions, credit cooperatives, fintechs - both large and small) to join the ecosystem, develop new services, and reach specific market segments [05:28-05:48, 16:33-16:44]. PIX has significantly contributed to financial inclusion, with an estimated 71 million Brazilians making their first-ever digital transaction via the platform [02:21-02:36].

Governance was established early through the PIX Forum, a collaborative body including the Central Bank and various public and private stakeholders, which was vital for defining rules, standards, and guiding the project’s evolution [06:32-07:08, 07:33-07:40]. Security and privacy were integrated by design from the beginning, including the creation of a dedicated private network and a security subgroup within the PIX Forum to address fraud prevention [14:51-15:08, 18:55-19:19]. The system was built to be adaptable, allowing for continuous evolution and the addition of new functionalities like scheduled payments, cash withdrawal, and integration with Brazil’s Open Finance initiative [15:21-15:37, 16:53-17:20].

Key Learnings & Recommendations

• Scalability is Critical: PIX’s adoption vastly exceeded initial forecasts (2,000 TPS), necessitating rapid scaling to 6,000 TPS within the first year. Systems must be designed for high scalability from the outset [00:07-00:28, 15:39-16:11].
• Open Model Fosters Innovation & Inclusion: Choosing an open, API-based model encouraged broad participation (800+ institutions), competition, and the development of diverse use cases tailored to different market needs, significantly boosting financial inclusion [03:59-05:12, 05:28-05:48].
• Stakeholder Collaboration is Essential: Early and continuous engagement with all relevant stakeholders (banks, payment institutions, government, tech companies) through structures like the PIX Forum was crucial for defining rules, ensuring buy-in, and guiding development [06:56-07:40, 14:09-14:17, 22:37-22:43].
• Prioritize User Experience: PIX’s ease of use (simple identifiers, fast transactions via mobile) was a major driver of its rapid adoption [03:04-03:49].
• Security & Privacy by Design: Integrating robust security features and privacy considerations from the project’s inception builds trust and credibility, which is vital for high adoption [14:51-15:12, 18:55-19:07]. Creating dedicated security working groups helps in fraud prevention [19:10-19:19].
• Build for Adaptability: Payment systems need to evolve. PIX was designed to be adaptable, allowing for the addition of new features (cash withdrawal, scheduled payments, Open Finance integration) to meet changing societal needs [15:21-15:37, 16:53-17:20].
• Central Bank Leadership: The Brazilian Central Bank played a crucial leadership role in initiating, designing, regulating, and operating the core infrastructure, while fostering ecosystem participation [00:45-01:02, 19:38-19:45, 20:14-20:22].
• Leverage Open Technologies: Using open technologies like HTTPS reduces entry barriers for participants and facilitates integration [16:12-16:33].

Key Visual Information

• PIX Logo/Branding: Displayed multiple times, emphasizing the system’s identity [e.g., 00:54, 01:27].
• Speaker Identification: Lower thirds identify Alexandre Vallerao (Senior Advisor/IT Manager) and Rafael Mello (Coordinator/Software Development Manager) from the Brazilian Central Bank [00:42, 01:03].
• Mobile App Demo: A visual shows a smartphone screen simulating a PIX payment via QR code, illustrating user interaction [03:12].
• Adoption Statistics: Several slides present key metrics:
  • 77% of the population use PIX [02:17].
  • 71 million people made their first digital transfer via PIX [02:30].
  • 224 million transactions on peak days [02:42].
  • 5 billion transactions in a single month [02:47].
  • 800+ participants in the PIX ecosystem [05:29].
• Participant Types: A slide lists the diverse institutions participating in PIX: Banks, Payment Institutions, Credit Co-operatives [05:33].
• PIX Forum: A slide highlights the PIX Forum, consisting of both public and private stakeholders [07:00].
• PIX Manuals: A slide indicates that PIX manuals cover rules, connectivity, security, SLA, payment initiation methods, etc. [09:35].
• PIX QR Code Standard: Text overlay states the QR code system was launched to set standards and avoid market fragmentation [10:37].
• Lessons Learned (Text Overlays): Key takeaways are summarized on screen:
  • Market participation is extremely important [14:13].
  • Security systems increase credibility [15:01].
  • PIX system was built to adapt and change [15:24].
  • Use of open systems/technologies is important [16:14, 24:19].
• Challenges (Text Overlay): Dealing with large transaction volumes poses technical challenges [18:10].
• Security (Text Overlay): A subgroup in the PIX Forum is dedicated to security issues/fraud prevention [19:14].
• DPI Approach (Text Overlay): DPI systems create an ecosystem designed to evolve [21:07]. Traditional digitization centralizes new features [21:39].
• Stakeholder Message (Text Overlay): Countries should talk to all relevant stakeholders [22:40].

Key Consensus Points & Methodological Spectrum

• Consensus Points:
  • The need for a modern, fast, low-cost, and widely accessible payment system in Brazil was recognized.
  • Financial inclusion was a primary goal driving the design and implementation of PIX.
  • Collaboration between the Central Bank and diverse market participants was fundamental to PIX’s success.
  • High availability (24/7) and robust security are essential for a national payment system.
• Methodological Spectrum/Approaches:
  • Open Ecosystem Model: PIX was intentionally designed as an open system using APIs, allowing a wide range of financial institutions (banks, fintechs, etc.) to participate, innovate, and build services on top of the core infrastructure. This contrasts with a closed model where the central entity controls all features [04:07-05:12, 21:04-21:47].
  • Central Bank Leadership & Governance: The Brazilian Central Bank took a strong leadership role in developing the core system, setting standards, and defining regulations. However, it established the PIX Forum, a multi-stakeholder governance body, to ensure market input and collaboration on rules and evolution [06:32-07:40, 19:38-20:08].
  • Iterative Development & Adaptability: The system was built with adaptability in mind, allowing for continuous development of new features and functionalities based on market needs and evolving technology [15:13-15:37, 16:53-17:20].
  • Focus on User Experience: Design choices prioritized ease of use for end-users (e.g., simple aliases, QR codes) to drive adoption [03:04-03:49].

Key Questions Addressed or Raised

• Addressed:
  • What is the PIX system and what does it do? [01:14]
  • How can citizens sign up and use PIX services? [02:57]
  • What were the key design choices made for PIX? [03:52]
  • What was the development journey of the PIX system? [06:14]
  • What international collaborations supported the development of PIX? [11:00]
  • What are some of the most successful use cases of PIX? [12:16]
  • What challenges were faced during development (scalability, security, stakeholder integration)? [17:43]
  • What role can DPI champions and stakeholders play in building DPI systems (Central Bank leadership, ecosystem participation)? [19:31]
  • What is the advantage of the DPI approach over traditional digitization methods (ecosystem evolution vs. centralized features)? [20:51]
  • What are key messages/learnings for countries in the early stages of DPI implementation? [22:21]
• Raised (Implied):
  • How can the PIX model be adapted or replicated in other country contexts?
  • What are the future evolution plans for PIX (e.g., offline payments, international payments)? [17:37-17:42]
  • How can security challenges like fraud be continuously managed in an open, real-time payment system?

Stated or Implied Applications

• Person-to-Person (P2P) Transfers: Initial primary use case [12:27].
• Person-to-Business (P2B) Payments: Paying businesses, both large merchants and small/informal businesses, online and in physical stores [02:07-02:16, 12:50-12:57].
• Business-to-Business (B2B) Payments: Implied through broad ecosystem participation.
• Person-to-Government (P2G) Payments: Paying government entities [13:55].
• Government-to-Person (G2P) Payments: Government paying citizens [13:50].
• E-commerce Payments: Using PIX QR codes or other methods for online purchases [13:07-13:12].
• Utility Bill Payments: Paying monthly bills like energy or telephone using PIX QR codes printed on the bill [13:20-13:44].
• Cash Withdrawal: A feature allowing users to withdraw cash via PIX [17:04-17:09].
• Scheduled Payments: Functionality added post-launch [17:09-17:12].
• Integration with Open Finance: PIX is integrated with Brazil’s Open Finance initiative, enabling new payment initiation forms [17:13-17:20].

Key Terminology Defined

• PIX: Brazil’s instant payment system, launched and operated by the Brazilian Central Bank. Enables fast, 24/7, low-cost transfers using simple identifiers [00:54, 01:26].
• PIX Forum: A permanent advisory committee comprising the Central Bank and various public and private market participants, responsible for discussing and proposing rules, standards, and the evolution roadmap for PIX [06:56-07:08].
• Open Model / Open Approach: A system design philosophy (used by PIX) that utilizes APIs and standardized protocols to allow broad participation from diverse actors (banks, fintechs, etc.), fostering competition and innovation within the ecosystem [04:24-05:12, 24:35-24:40].
• TIPS (Target Instant Payment Settlement): The European instant payment system, mentioned as a system Brazil looked at during PIX’s design phase [11:30].
• P2P / P2B / P2G / G2P: Acronyms for different payment types: Person-to-Person, Person-to-Business, Person-to-Government, Government-to-Person [12:27, 12:50, 13:50, 13:55].

Timestamped Outline / Chapters

• [00:00] - Introduction & Speaker Intros (Rafael Mello)
• [00:42] - Speaker Intro (Alexandre Vallerao)
• [01:14] - What is the PIX system and what does it do?
• [02:57] - How can a citizen sign up and use the PIX services?
• [03:52] - Tell us about the design choices made for PIX?
• [06:14] - What was the journey of development of the PIX system?
• [11:00] - What kind of international collaborations supported the development of PIX?
• [12:16] - What are some of the most successful use cases of PIX?
• [14:08] - What lessons emerged from the development journey of PIX? (Rafael Mello)
• [16:46] - How has PIX expanded in terms of its usage across sectors?
• [17:43] - What were some of the challenges that you faced during the development?
• [19:31] - What role can DPI champions and stakeholders play in building DPI systems? (Alexandre Vallerao)
• [20:51] - What is the advantage of DPI approach over traditional digitisation methods?
• [22:21] - Any message or learnings for countries who are in their early stage of DPI implementation?
• [25:20] - Credits & End Screen

Related Resources Mentioned

• TIPS (Target Instant Payment Settlement): European instant payment system [11:30].
• Mexico & Australia Payment Systems: Referenced as examples studied during PIX development [11:34].