U.S. Opens Inquiry Into Brazil's PIX Instant Payment System

Brazil's instant payment system PIX faces an inquiry opened in July by the Office of the U.S. Trade Representative, which alleges the system imposes unfair competition on U.S. credit card operators by offering an alternative to their transaction fees.

PIX is governed by Brazil's Central Bank rather than private banks. It allows anyone with a Brazilian individual taxpayer identification, registered companies or government entities to transfer funds in real time provided they hold a Brazilian bank account.

The system also supports QR code payments. Launched in 2020, PIX processed $7 trillion in transactions last year. Individuals pay zero fees for transfers while some banks charge companies fees that remain significantly lower than those for regular bank transfers, which can take hours to complete.

The system has widespread adoption across income levels. A 21-year-old vendor of iced tea and cassava starch biscuits on Ipanema beach in Rio de Janeiro said PIX is the most used payment method because people no longer carry cash and instead use their phones.

A 57-year-old restaurant owner in Sao Paulo uses PIX to pay suppliers for transactions above 1,000 Brazilian reais, equivalent to about $200. He noted that many suppliers do not accept credit cards for such amounts, though most of his lunch clients still prefer credit cards or meal vouchers.

Large purchases are also completed through PIX. Houses, cars and even helicopters can be bought using the system, though hefty sums often require prior bank approval. Many large corporations in Brazil use PIX to pay workers.

India operates a similar instant payment system that charges no transaction fees. That system processed $300 billion in payments in March alone. The U.S. Trade Representative has not opened an inquiry into the Indian system.

Criminal networks have exploited PIX by stealing phones and transferring funds instantly. Brazilian authorities and companies respond by tracking and closing accounts involved in suspicious transactions. m. until the next morning to limit fraud when account holders may not notice alerts.

The Brazilian Forum of Public Security estimates that between 24 million and 28 million people were affected by PIX-related crimes between January and September of last year. The group has not released an estimate of total losses. An expert on Brazil's digital law said that while PIX is safe from a technical and legal standpoint, its risks stem from social engineering rather than the technology itself.

The most common fraud involves psychological manipulation, fake IDs and urgent requests for payment. Despite these issues, 178 million of Brazil's 213 million residents have registered for PIX. >"From the technical and legal standpoint, PIX is safe.