Brazil’s innovative Pix banking system is replacing cash and credit cards

Kelvin Quadros Winck works at a local cellphone accessory store in Brazil. He said that while his customers do occasionally use debit and credit cards to pay, it’s rare that any of them use cash. 

“Yeah, it’s been more than a year since I used paper money,” he said.

Instead, people use Pix, the online instant payment system local to Brazil.

“All ages are using Pix,” he said. “Everyone’s adapted. Before, it was money. Now, it’s Pix.”

To send a payment, the user only has to open the banking app on their smartphone, click a few buttons, scan a QR code and click “send.” The transaction is instantaneous. 

Pix is free, online and in almost four years has revolutionized how Brazilians pay for things. It’s like sending a wire transfer through a banking app, but without a third party like Venmo or Cash App. 

Its use has surged in recent years, outpacing cash and credit and debit cards.

“It’s great,” said Aglair Stoco, who works at a local ice cream shop. “I use Pix a lot. Principally, because you don’t have to go to the bank or to the store to pay your bills and things.”

Now, she just pays her bills with Pix from home.

The Central Bank of Brazil rolled out the Pix system in late 2020, in the middle of the COVID-19 pandemic. Its goal was to make payments in Brazil more convenient, and also to make financial transfers more inclusive of the general population.  

It has turned monetary exchange in Brazil upside down, with nearly 42 billion payments across the Brazilian economy last year. 

Pix is now the most-used way to make purchases or send money in Brazil, far surpassing credit and debit card transactions. 

It’s making cash nearly obsolete — but not completely.

Zilda Souza works at a souvenir shop in the Florianopolis public market. She said the majority of her customers pay with Pix, but she’s never jumped on board what she calls “the Pix scam.” 

“I don’t use Pix because you have to use your CPF,” she said. A CPF number is a Brazilian tax ID, akin to a social security number. 

“Lately, everything’s out there. There are hackers, and people can get at all your information. I don’t need it,” she added.

But Souza is one of few holdouts. Economist Daniel Vasconcelos, who teaches at the Federal University of Santa Catarina, said security is actually one of the reasons why the Pix system has been so successful. Pix has increased the circulation of money in the economy while mitigating safety concerns.

“In many of Brazil’s major cities, there is a chronic problem of urban violence. Armed robbery, theft, that sort of thing,” he said. “Now, Pix created the possibility to go out and pay without having any money in your pocket.”

He said it has also benefited rural Brazilians, who have limited access to banks.

“We have regions that have relatively few banks,” he said. “Small municipalities. Or areas where the town center is really far from where people live. And now, they can do everything without having to travel.”

Vivian Machado sells kitchen towels on the street. At her post, a big, colorful sign features the deal of the day and her Pix QR code. While many of her customers use Pix to pay, she acknowledges that the option isn’t accessible to everyone.

“People use money. A lot more use Pix,” she said. “But sometimes, people don’t want to use it. Or they can’t … if their cellphone runs out of battery or they don’t have enough data.”

One group that’s been left out of the Pix revolution: the homeless. Mauricio Soares came to the state capital in search of work. It didn’t pan out.

“I’m sleeping on the street there,” he said. “I’m trying to find some money to get a bite to eat. It’s not easy.”

Pix means people have less cash or change in their pockets. They could send him money via Pix. But in order to receive it, Soares would need a bank account, and a cellphone with data — two things he and many other unhoused people do not have.

But he is still a minority in a country dominated by Pix. 

According to economist João Rogério Sanson, the idea of a federal instantaneous payment system is not new. He said Japan was the first to launch such a system back in the 1970s. The US Federal Reserve unveiled one last year called FedNow. But these have largely catered to businesses, not the general population. 

“After planning for a few years, Brazil started the service in 2020,” Sanson said. “Pix’s difference was that the Brazilian Central Bank forced all banks to offer the service, perhaps reflecting a certain authoritarian culture in the country. Fortunately, the system was well-accepted by the population.”

Pix is also inspiring some of Brazil’s neighbors to follow suit. At least half a dozen other Latin American nations have rolled out some form of an instant payment system in recent years. Brazilian tourists can now also use Pix in neighboring Uruguay and Argentina.

And for the Central Bank of Brazil, Pix is apparently just the beginning. 

“Pix is ​​considered a preparation for the future Brazilian digital currency, which, for now, has the acronym DREX, in Portuguese, for ‘Digital Brazilian Real System,’” Sanson said. “It will be created using the blockchain technique.”

The spread of these online payment methods across Latin America is a sign of things to come, in a future with a lot more cellphones and a lot less cash.