PIX: Can it Help Create a Digital Payments Ecosystem in Brazil?
| Case Code: ECON101 Case Length: 12 Pages Period: 2016-2022 Pub Date: 2022 Teaching Note: Available |
Price: Rs.300 Organization : Central Bank of Brazil Industry : Financial Services Countries : India Themes: Government & Economy, FinTech,Government Policies,Financial Institutions |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Problems in the Existing Financial System
The issues prevailing in the Brazilian financial system were the prime reason why the government felt the need to introduce digital payments at the national level. There was a low level of trust in the existing system, leading to the financial exclusion of a large section of the population, whose requirements were not met by the existing financial products...
The Need for an Instant Payment System in Brazil
The need for the national level roll-out of a digital payment system was felt all the more because of the expected benefits, especially safer transactions and financial inclusion, that would invigorate the Brazilian economy...
Lessons from India’s UPI
The National Payments Corporation of India (NPCI), a non-profit owned by the Reserve Bank of India (RBI), launched UPI, an instant real-time payment system, in 2016. The main intention behind UPI was to bring payment efficiencies to low value transactions, and it unified multiple legacy payment systems via an open API architecture...
Implementing Pix in Brazil
Apart from India, the newest and most promising entrant in this space was PIX, the state-owned instant payments system in Brazil. It was through PIX that all wallets that used QR Codes would be interoperable, meaning transfers and payments would be allowed from one e-wallet to another in real-time, 24/7. However, India’s UPI had been at the forefront of these digital rails, with companies like Google advocating that other countries explored similar models...
Future Outlook
The Central Bank of Brazil had plans for new PIX features for companies and consumers. The bank was planning to launch Pix Cobrança to ensure that retailers and service providers could generate a QR code for making a payment that expired at a future date..
Exhibits
Exhibit I: Brazilian Payments Market, 2019-20
Exhibit II: The Mechanics of the UPI Payment
Exhibit III: UPI’s Growth and Expansion
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