What is PIX?
PIX is an instant payment system launched by the Central Bank of Brazil in November 2020. Designed to modernize Brazil’s financial infrastructure, PIX offers a fast, accessible, and cost-effective solution for payments, benefiting individuals and businesses alike. It stands out as a cornerstone in the push toward financial inclusion, digitalization, and reduced reliance on cash.
Known by its popular slogan, “Faz um Pix” (Make a Pix), the system quickly became a cultural phenomenon in Brazil, including millions of people in the formal financial system. PIX has played a pivotal role in empowering previously unbanked populations by providing them with access to a secure and easy-to-use digital payment tool.
The Rise of PIX: Adoption and Growth
Since its launch in November 2020, PIX has become a cornerstone of Brazil’s financial system, demonstrating remarkable growth in adoption and transaction volumes. As of December 2024, PIX has registered over 168 million users, including approximately 153 million individuals and 15 million businesses. This widespread adoption reflects the system’s ease of use and efficiency, making it an integral part of daily financial transactions in Brazil.
Cumulatively, PIX has processed over BRL 2.4 trillion in transactions since its inception. Its capacity to handle high transaction volumes was exemplified on September 6, 2024, when it processed a record-breaking 227.4 million transactions in a single day, totaling BRL 118.4 billion. These milestones highlight its scalability and reliability, even as transaction demands grow.
The post-pandemic acceleration of digital payment adoption has been a major driver behind PIX’s success. Its lower costs compared to traditional payment methods, such as credit cards or wire transfers, make it an attractive option for businesses and high-value users. Additionally, its simplicity—offering payments through QR codes, phone numbers, or email addresses—has made it accessible to a wide demographic, fostering inclusion and convenience across all sectors.
Key Features of PIX:
Instant Payments: Transactions are completed in seconds, 24/7, including weekends and holidays.
Cost Efficiency: Free for individual users, with significantly lower fees for businesses compared to traditional payment methods like credit cards or bank transfers.
User-Friendly Design: Enables payments through PIX keys (phone numbers, email addresses, or unique codes) and QR codes, making it easy for users and businesses to adopt.
Interoperability: Seamlessly connects banks, fintechs, and other financial institutions within a unified network.
Robust Security: Advanced encryption and real-time authentication ensure safe transactions.
The Purpose Behind PIX
PIX was created with the vision of transforming the Brazilian payment ecosystem by addressing inefficiencies and fostering inclusion. Its goals include:
Enhancing Financial Inclusion: Allowing unbanked and underserved populations to access digital payments via mobile devices.
Reducing Cash Dependency: Lowering costs and risks associated with cash handling for individuals and businesses.
Driving Digital Transformation: Encouraging the use of digital transactions, particularly in a rapidly evolving financial landscape.
Why PIX Matters for Businesses
For companies managing significant payment volumes, PIX is more than just a convenience - it’s a strategic advantage. Its real-time processing capabilities improve cash flow, reduce operational bottlenecks, and lower transaction costs. Businesses in industries such as e-commerce, supply chain management, and payroll processing can particularly benefit from its speed and scalability.
By combining efficiency, affordability, and inclusivity, PIX has not only reshaped payments in Brazil but also set a new global benchmark for real-time payment systems. Its potential for integration with international transactions in the future positions it as an essential tool for companies operating on a large scale.
PIX Modalities: Tailored Solutions for Every Need
PIX offers a range of functionalities beyond simple payments, making it a versatile tool for businesses and individuals. These modalities address specific needs, from cash handling to flexible payment options:
PIX Saque: Withdraw cash at stores, not just banks.
PIX Troco: Pay extra during a purchase and receive the difference in cash.
PIX Cobrança: Receive payments through PIX for invoices or services.
PIX Agendado: Schedule payments for future dates.
PIX Parcelado: Split purchases into installments via PIX.
Tap-to-Pay PIX: As of February 28, 2024, PIX users on Android can make payments by simply tapping their phone on a card reader, similar to contactless credit and debit cards. The Central Bank of Brazil has set an initial per-transaction limit of R$500, with users able to adjust their individual caps. While this feature remains optional for financial institutions, all banks participating in open finance must support it via Google Pay, currently the only digital wallet approved for tap-to-pay PIX transactions.
These features showcase PIX’s adaptability, helping businesses optimize operations, improve cash flow, and enhance customer experience.
How PIX Works
PIX operates through an innovative and robust infrastructure designed by the Central Bank of Brazil. It facilitates real-time payments by connecting various financial institutions and payment service providers in a seamless ecosystem. Here's an in-depth look at how it works:
Technical Infrastructure
PIX relies on two key components to enable fast and secure transactions:
SPI (Instant Payment System):
SPI is the central processing system that handles all PIX transactions. It operates 24/7, ensuring that payments are processed instantly, regardless of the time or day. The system is built with scalability in mind, capable of managing millions of transactions simultaneously without delays or bottlenecks.
DICT (Transaction Identifier Directory):
DICT acts as the registry for PIX keys, which are unique identifiers (like phone numbers, email addresses, or random codes) linked to users’ bank accounts.When a payment is initiated, DICT ensures that the PIX key provided corresponds to the correct recipient account, streamlining the transaction process.
Together, SPI and DICT form the backbone of PIX, ensuring efficiency, accuracy, and security.
The Role of Financial Institutions
PIX connects a wide range of entities, including:
- Banks.
- Fintechs.
- Payment service providers.
These entities integrate PIX into their platforms, allowing their customers to send and receive payments effortlessly. By mandating participation for larger financial institutions, the Central Bank ensures broad coverage and interoperability across the entire financial ecosystem.
The Transaction Process
A PIX transaction is simple yet highly efficient. Here’s how it typically unfolds:
1. Initiation:
A user initiates a payment using a PIX key (e.g., phone number, email address, NFC or a QR code) via their bank or fintech app. Alternatively, users can manually enter the recipient’s account details if a PIX key is unavailable.
As of February 28th 2025, users can use the tap-to-pay system via their digital wallet connected to the mobile phone.
2. Validation:
The financial institution sends the transaction details to the DICT to confirm the PIX key or account information. This step ensures the payment is directed to the correct recipient.
3. Processing:
Once validated, the SPI processes the transaction instantly. Funds are debited from the sender’s account and credited to the recipient’s account in real-time.
4. Notification:
Both the sender and the recipient receive immediate confirmation of the transaction, providing transparency and reassurance.
Scalability for Businesses
While PIX is designed to handle transactions of all sizes, its architecture is particularly suited for businesses managing high volumes or large-value payments. The ability to process bulk payments or pay multiple recipients simultaneously (e.g., payroll or supplier payments) makes it a powerful tool for enterprise use.
Benefits
Cost Efficiency
PIX operates with no fees for individuals and significantly reduced costs for businesses. While traditional wire transfers in Brazil (e.g., TED or DOC) can cost BRL 15–25 per transaction, PIX often charges only a fraction of that or, in some cases, nothing at all for certain transaction types. This is especially beneficial for high-volume businesses that conduct multiple payments daily, such as e-commerce platforms, wholesalers, or payroll managers.
By using PIX, businesses can save substantial amounts on transactional fees, enabling them to reinvest these savings into other operational areas, such as scaling their supply chains or improving customer experiences.
Additionally, for businesses dealing with large volumes of payments—like supplier settlements or payroll disbursements—PIX’s cost advantages are even more pronounced, as the savings per transaction are multiplied by the total number of transactions processed.
Speed and Liquidity Management
Instantaneous Payments
PIX processes transactions in real-time, meaning payments are completed within seconds, regardless of the time or day, including weekends and holidays. This immediacy is transformative for businesses, particularly those with complex cash flow requirements.
For high-value payments, PIX’s speed enables businesses to optimize liquidity by ensuring funds are immediately available for reinvestment or other critical needs. For instance:
- A company can instantly pay suppliers, avoiding penalties for late payments or delays in the delivery of goods.
- Payroll disbursements can be completed in seconds, ensuring employees are paid promptly and improving overall employee satisfaction.
Enhanced Cash Flow Efficiency
With PIX, businesses can manage their cash flow more dynamically. The ability to send and receive payments instantly means they can:
-Reduce the need for maintaining large reserves of working capital.
-Use incoming payments more efficiently to settle outgoing obligations.
-Avoid costly overdrafts or reliance on short-term credit to cover liquidity gaps.
For example, an e-commerce business that receives customer payments via PIX can immediately use those funds to pay suppliers or invest in inventory. This level of cash flow fluidity was unattainable with traditional systems that often required multiple days for settlement.
Reducing Payment Delays in Supply Chains
In supply chains, where timely payments are critical to maintaining smooth operations, PIX significantly reduces delays. Payment delays can lead to:
- Disruptions in the delivery of goods or services.
- Increased costs due to penalties or expedited shipping fees.
- Strained relationships with suppliers.
PIX eliminates these issues by enabling instant payments, allowing businesses to settle invoices as soon as they’re received or when goods are delivered. Suppliers, in turn, gain immediate access to funds, improving their ability to reinvest in production or pay their own suppliers. This creates a positive ripple effect throughout the supply chain, enhancing overall efficiency and collaboration.
For high-value transactions, PIX’s immediacy can also help mitigate risks associated with fluctuating exchange rates (when applicable) or delays caused by cut-off times in traditional banking systems. This reliability makes it an invaluable tool for businesses seeking to streamline operations and reduce friction in their supply chains.
Security and Compliance in PIX
Security Features
PIX employs a multi-layered approach to ensure the safety of its users and transactions. Key security measures include:
Advanced Encryption: All PIX transactions are encrypted end-to-end, ensuring that sensitive data remains secure during transmission. This prevents unauthorized access or data breaches.
Real-Time Fraud Monitoring: The PIX infrastructure integrates with advanced fraud detection systems that monitor transactions in real time. These systems use machine learning and predictive analytics to identify unusual patterns, such as repeated high-value transfers or transfers to flagged accounts, allowing financial institutions to block or flag suspicious activity immediately.
User Authentication:PIX requires strong user authentication methods, such as biometrics, PIN codes, or token-based two-factor authentication, depending on the participating financial institution. This ensures that only authorized users can initiate transactions.
Unique PIX Keys: The use of PIX keys, such as phone numbers, email addresses, or randomly generated codes, minimizes the need to share sensitive bank account details. This adds an additional layer of security, reducing the risk of phishing or unauthorized access.
Transaction Limits and Controls: To further enhance security, financial institutions impose daily and per-transaction limits for PIX transfers, particularly for high-value transactions. These limits are adjustable by users, adding an extra safeguard against fraud.
Compliance Framework: PIX operates within a strict compliance framework established by the Central Bank of Brazil, ensuring that it aligns with national and international standards for financial systems. This robust regulatory structure makes PIX not only a secure option but also a trustworthy one for businesses and individuals.
Know Your Customer (KYC): Financial institutions offering PIX are required to adhere to stringent KYC protocols. This ensures that all users are properly identified, minimizing the risk of fraudulent accounts or transactions.
Anti-Money Laundering (AML) Measures:PIX complies with Brazil’s AML regulations, which are in line with global standards set by organizations like the Financial Action Task Force (FATF). Transactions are monitored for suspicious activity, and financial institutions are required to report any anomalies to relevant authorities.
Data Privacy Compliance:PIX is fully compliant with Brazil’s General Data Protection Law (LGPD), which governs the handling of personal data. User information is securely stored and processed in accordance with these regulations, ensuring transparency and accountability.
Dispute Resolution Mechanisms: To protect users and ensure trust in the system, PIX includes clear guidelines for resolving disputes. Whether due to unauthorized transactions or technical errors, users have access to formal processes for addressing issues quickly and effectively.
Use Cases
Applications
1. Bulk Payments for Payroll
Large enterprises are increasingly using PIX to handle payroll disbursements. By leveraging PIX's instant payment capabilities, companies can transfer salaries to employees in real-time, regardless of banking hours or weekends. This immediacy ensures that employees receive their wages promptly, enhancing satisfaction and trust within the organization.
Benefits:
Efficiency: Streamlines the payroll process by reducing processing times.
Cost Savings: No transaction fees compared to traditional bank transfers.
Employee Satisfaction: Immediate access to funds improves morale and financial well-being.
Example: A multinational corporation with thousands of employees adopted PIX for payroll, resulting in a 50% reduction in processing time and significant savings on transaction fees.
2. Supplier Settlements
Timely payments to suppliers are crucial for maintaining robust supply chains. Businesses use PIX to settle invoices instantly, avoiding delays associated with traditional banking processes. This promptness strengthens relationships with suppliers and can lead to better negotiation terms or discounts.
Benefits:
Improved Cash Flow: Immediate debiting and crediting of accounts.
Supply Chain Efficiency: Reduces the risk of delays in goods and services delivery.
Stronger Supplier Relationships: Builds trust through prompt payments.
Example: A manufacturing firm integrated PIX into its accounts payable system, which led to a 30% improvement in supply chain efficiency and enhanced relationships with key suppliers.
3. E-commerce and Recurring Billing for Subscription Services
E-commerce platforms have embraced PIX to offer customers a fast and convenient payment method. The instant confirmation of payments allows businesses to process orders without delay, enhancing customer experience and satisfaction.
Subscription-based services utilize PIX for recurring billing, ensuring timely receipt of payments and uninterrupted service delivery. Automated PIX payments reduce administrative burdens and minimize the risk of missed or late payments.
Benefits:
Faster Order Processing: Immediate payment confirmation accelerates order fulfillment.
Customer Convenience: Simplifies the payment process, encouraging repeat business.
Reduced Administrative Work: Automation of recurring payments streamlines billing cycles.
PIX International
Pix, is expanding its reach beyond the country's borders, enhancing the convenience and accessibility of cross-border transactions. The introduction of Pix in Argentina occurred spontaneously, with locals seeking assistance from Brazilian contacts to access funds. Argentine stores now accept Pix payments through various platforms. This system mirrors Brazil’s approach: customers scan QR codes for immediate payment, which is credited in Brazilian reais to their accounts, while Argentine merchants receive payment in pesos or digital dollars.
The Role of PIX in Cross-Border Transactions
The Central Bank of Brazil has announced plans to expand PIX’s capabilities to support international payments. While still in development, these efforts aim to connect PIX with global payment networks and leverage its core infrastructure for cross-border use cases.
Potential Features of PIX for Cross-Border Payments:
Real-Time Transfers Across Borders:Similar to its domestic functionality, PIX could enable near-instant transfers between countries, eliminating delays caused by intermediaries and banking hours.
Lower Transaction Costs:By bypassing traditional correspondent banking networks, PIX has the potential to significantly reduce fees for cross-border transactions, making it especially attractive for SMEs and large businesses.
Multi-Currency Support:Future iterations of PIX may include currency conversion capabilities, allowing businesses to send payments in BRL and have recipients receive funds in their local currencies.
Integration with Other Instant Payment Systems: PIX could connect with other real-time payment systems globally, such as the U.S.’s FedNow or Europe’s SEPA Instant, creating a seamless international payment network.
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