1 - you register your keys with your Bank, and it communicates the Central Bank. It can be your "ssn", your phone number, your email or some random id.
2 - to pay somebody, just provide the key. Your institution will look up in the Central Bank database who'll be paid with that key (the destination: Bank, account number)
3 - your Bank withdraw the funds from your account, the destination Bank deposits it (there's a tight time limit), the Central Bank does the compensation among banks.
4 - there's no disput: once you authorized it in your Bank, it's done.
If your Bank provides you with credit, it's a commercial relation between you and your Bank. Pix is just a transfer from your balance, it doesn't involve credit lines and so on.
So, in the end it's simple: money transfer with tight rules made by a Central Bank and obligatory adoption from all Banks.
The keys are the most relevant aspect to the clients: your phone number, your "ssn" ( In Brazil it's called CPF and it's public, it's not a secret number). Just like WhatsApp made it easy by using phone number instead of some login.
Nice to see at least one country managed cut out the middleman that is visa/mastercard as well as the merchant services.
We in Switzerland didn't get that lucky. Instead we have a new middle man Twint (partially owned by the banks?) which charges much higher fees to merchants than the credit card companies did. P2p is free which they claim is paid by the bank fees but p2b is of course not. When being pushed why their fees are so high they give you the run around. Of course again the perfect racket because the end customer doesn't know about the fees, they just want to use the app and if as a merchant you don't accept this payment method you loose the business.
Because of the fee you also loose usability for the P2p payments. P2b payment is done via qr code, they do everything to prevent you from being able to do a p2p payment with a qr code as it would allow businesses to do p2p payments instead of p2c. For p2p you need to enter someone's phone number or IBAN even if they are standing right next to you.
I believe banks in Brazil are also free to require a fee from the sender (maybe the receiver as well, not sure) in b2b transactions. P2p fees was one of the items in the previous president's FUD campaign against his opposer, the current president.
It's not the sender, but the receiver. CNPJ's ("SSNs" for Juridic/Business entities) pay a % of the received money.
Many banks, specially the neobanks/fintechs are making it free for small business tho.
I have a business to sign contracts for soft dev and I was charged once for a pix transaction between another business account on a different bank.
That bank is not my primary anymore, I started transferring using the old system (TED) to avoid it. TED takes ~15 minutes (from 0800 to 1700) instead of <1 sec (24h/7d), so not a big loss for internal transfers.
Still using the dumb bank because of other reasons, but not primary.
Kinda spoils the whole effect of a headline like "$FOO surpasses credit card institutions". It'd be news if it didn't.
That being said, this is probably the best way to move forward with digital payments - if it's under control of the government then:
1. The middlemen are cut out.
2. It only needs to make enough money to sustain itself, not provide profits to shareholders.
3. You can't simply silence people you don't agree with. You can't simply say "we're not allowing parties who don't follow our ideology to perform transactions". Any party who is now not allowed to do transactions by the government were also previously not allowed to do transactions.
That being said, I cannot see the major Western governments adopting this approach. Firstly, there's just too many benefits to citizens at the expense of the politicians "lobbying" income, and secondly, governments like being able to shut down certain parties. With Visa/Mastercard they can simply ask Visa/Mastercard to stop transacting with that party and there's no recourse for that party.
When the government itself wants to silence that party, their are many more hoops to jump through, and there is still legal recourse.
> Kinda spoils the whole effect of a headline like "$FOO surpasses credit card institutions". It'd be news if it didn't.
Not necessarily. The banks are required to implement it and provide it as a service. The real win of the system is actually how good it is, and how in some instances it's better than using cards.
These days, whenever I'm there, I favour Pix over cards whenever I can. To me personally, it's not only more convenient in some cases (and the only option in others) but it's also a way of avoiding sending data and money to the likes of Visa and MasterCard.
Argentina has adopted the system to attract Brazilian tourists as well, which means as a Brazilian you can get away with a lot there even if you don't have an international card.
My banks all have different mechanisms, but all around limiting the amount.
For instance in one of them I can add trusted accounts for unlimited amounts (it takes a random time from 24 to 48h to get it through), for all others I have a really low limit for transfers between 8pm to 8am and a bit bigger for daylight.
Another bank added location detection with gps through the mobile app and I can add the trusted places to make bigger transactions.
Let's say I want to buy a car.
I can immediately transfer for instance US$ 1000 as a signal of intention, add the car seller as a trusted account, and wait 48h to transfer the rest.
In the worst case, If I get abducted by a criminal my bank app mandates the gps to be turned on for any movements. If my family moves fast enough with authorities this can help locate me, and also coordinate with the bank means to monitor the account.
On the other hand some abduction criminals are settling with smaller values to move fast and not get caught, but in these cases they will do some gross mistakes. The problem is the police forces doing more mistakes than the criminals.
For frauds without physical contact, it increased the amount between elders, but at least in my family we came up with a strong framework to check with someone like me that is more digital literate to provide some "consultancy" to the elders.
My dad for instance had a extremely high limit because the bank manager did a mistake, even on a traditional private bank account. I talked directly to the manager explaining that her actions were against the own bank recommendations.
And oh, this is not different from the past were the elders were compelled to give money in physical form, with elders hiding this from the family for some reason.
The amount of scam in my family is stable for now between the old way versus the new way.
The thing just moved faster (it took few hours for the rest of family to find out), but safer (the elder in question didn't need to physically handle the money).
Yeap, that’s the case. Pix is awesome, but is being used to scam people all around the country. Our Central Bank is trying to tackle this issue since with new features, such as limiting transaction at night (when kidnapping is more common) and, soon, new disputing mechanisms.
Direct API access to the Central Bank's internal system is only given to participating banks. Your bank might make available a separate API through which you can generate temporary QR Codes with a value attached, for instance. This is very common. These QR codes aren't requests for payment in the strictest sense, because they aren't targeted at an user specifically: anyone that scans the QR code can pay.
To popularize the system, the central bank forbid the banks from charging for transactions in the first 12 months. That was very contentious because before we had a system called TED which allowed transactions only in business days and within a 1~24h window. Most (not all) banks charged a fixed fee of 1 to 15 BRL per transaction. This revenue source was cut all of a sudden.
Now, they allow banks to charge fees for businesses, if they wish. Some banks have fixed fees, some charge up to 1% per transaction (half the fee for debit card transactions in Brazil), sometimes also defining a ceiling (max 130 BRL fee per single transaction).
Pix is a great system and I definitely appreciate what our central bank has done.
But what I don’t see people talk about are the other motivations (other than no fees compared to credit cards)
The last number I remember is that around 30MM Brazilians did not have bank accounts. There’s a large amount of “informal” work that happens in the country where people just get paid in cash. Pix is an alternative to that. It incentivises people to get a bank account.
My tin-foil hat alter-ego can’t help but think that this helps the central bank have more oversight of where the money is going. And the central bank does share data with our “IRS”. That’s probably a good way to find people that should’ve been paying taxes and aren’t.
Keep your tin-foil, it's not a conspiracy. Despite the successful system, Brazil has a tradition of charging taxes on every financial transaction, including money transfers. This system makes this type of tax incredibly easy, and such tax has been discussed multiple times. Also, a consolidated report (no information on individual transactions) gets sent to the Brazilian IRS just like the US does with stocks and mutual funds sales.
Yes and no. Informal work is generally done by poorer folks. While they should be paying taxes, the Brazilian income tax system penalizes low income earners the most. It’s not a progressive tax system like you find in Europe or the US. When you go to the next tax “band”, it’s not just the excess income that gets taxed at the new band. it’s all of your income.
For example, say there’s no income tax on incomes below 30k a year, and the first tax bracket is 20%. The moment your earnings go to 31k you’ll net less money than someone making 30k because the 20% is applied to all 31k.
This obviously has a pretty negative effect on low income families.
I still remember the surprise when I got my first salary raise and it bumped me from the 20% bracket to the 27.5% bracket and realized I was making less money.
As far as I remember (I used to be Brazilian) the tax is applied to the difference, so 20% is discounted from the maximum for the 20% bracket, and 27.5% (and, boy, I wish I only paid 27.5% tax here) is applied to the difference.
Or am I misremembering? Maybe it's taken from the payslip, but returned with the yearly adjustment (which could make sense)
> And yeah, I also miss 27.5% tax. Ireland’s 52% marginal tax rate makes me sad every time.
OTOH, we don't have to walk through someone's living room when going to work, or buy candy from kids on traffic lights.
Equality has a price I'm more than happy to pay. I still remember how rare a sight kids selling candy on traffic lights was in the mid 2000's and it crushes my soul to see that again when I visit my family down there.
It was always progressive. A lot of people think it isn't and I have no idea where that came from. You probably misinterpreted your _holerites_ back then.
It is only in the difference between the brackets, technically you should never make less money by going into a higher bracket, just less then you expected.
Brazilian here: you are probably misremembering it, or there was some other kind of deduction happening in your payslip.
And I say this with confidence, because Brazilian tax brackets work progressively, and have worked like that since always, just like every other sane country out there.
I'm Brazilian and Pix is great. No reason to use anything else. Our government is terrible, but our central bank is actually quite competent. Credit to where it's due.
It's not a credit line so it has all the disadvantages of debit cards. It's also fully government controlled which is just stupid especially in a country like Brazil which has a known history of abuse of power with good and bad intentions.
There are numerous reasons to prefer physical cash to all other forms of money but nobody cares because pix is easy and convenient. I bet people will suddenly start caring a lot when they finally start taxing it. By then it will be too late since it will be too entrenched in our society to use anything else.
> Our government is terrible, but our central bank is actually quite competent. Credit to where it's due.
I agree. The cause of the greatness apparently is apparently its autonomous nature. Somehow it manages to avoid answering to the rest of the government. Central bank setting high interest rates despite extreme political pressure is probably the only reason this country is still afloat.
There’s no tax on transactions between individuals by default. When dealing with business, banks can charge a small tax from business side only, but most banks waive this fee for competitive reasons.
Pix is so well designed and nice to use that sometimes I wonder how it exists. It’s one of those futuristic things we could only dream about a few years ago.
Anyway, many banks don't charge fees on Pix for business accounts, which they could, due to competition. Also, for small, individual merchants/professionals (“MEI”, in Brazilian lingo), Pix is entirely free (from fees and taxes).
Are you talking about the existing B2B fees that some banks choose to waiver, or are you talking about a hypothetical future tax on pix transactions?
CPMF was (allegedly) created as a token for customs and the central bank to monitor financial transactions. With Pix they have that "out of the box" so it would be harder to justify.
Are there similar payment systems out there similar to this? If it has truly surpassed credit and debit transactions, and there are no serious flaws that need addressing, then why don't we all start Pix in our countries?
Disclosure: I'm heavily invested in crypto and payment processors, and this payment system sounds awesome!
> then why don't we all start Pix in our countries?
Good question. Maybe some inter-bank tech is already in place in some countries that make it easier/harder.
I've been repeatedly told the Banking system in Brazil is top notch and an early adopter of many innovations. (I have also been told that this is because banking fraud and security are entangled in a very fast-paced arms race)
Maybe its just matter of time. There was a (top) post in HN about how the Fed was starting something that I _think_ is Pix in the US.
I'm not familiar with Pix but from what I've read, it's similar to India's UPI. There are only two real problems with UPI:
1. Card networks have standard dispute resolution process which often involves a temporary credit while the investigation is ongoing. Disputing UPI transactions on the other hand is painful.
2. Banks don't make any money on UPI transactions. And with UPI credit transactions, they are basically giving people interest free loans. And considering there are no transaction fees, this is open for abuse.
Alice registers as a merchant and has her friend Bob pay her a large amount of money using a UPI enabled credit card. Neither Alice nor Bob paid any transaction charges. Alice sticks the money in a high interest bank account and returns the money to Bob after 30 days along with half of the interest she earned. Bob pays off his credit card bill before the due date and therefore isn't charged any interest. Alice and Bob have made money out of thin air.
I don't think that kind of fraud would work in the Pix system. Pix transactions are debit, so Bob is out of the money immediately.
Of course, it is possible there might be some bank offering a pix-enabled credit card, but I don't see how they'd have any incentive, precisely because people could start doing that.
Sorry, was on mobile typing that, and turns out I was wrong.
The UPI over credit card is only for Peer to Merchant transactions.
To be a merchant (As against a peer merchant), you must have a month over month inflow of atleast 50,000 INR, for 3 months after being onboarded as a peer-merchant. [1]
I think you were talking about registering as a peer-merchant, not a "proper" merchant! MDR etc cannot be charged on peer-merchants[1], and are essentially peers, but with restricted purpose codes that they can accept money for.
> Are there similar payment systems out there similar to this?
FedNow just launched. Interac has something similar (but not identical) in Canada. Faster Payments in the UK. SEPA payments in the EU. NPP in Australia. UPI in India. Much of the world has had a comparable solution to some extent for a while now. Most of this materialized over the last 10 to 15-ish years.
Really the US was the main laggard and that's over now.
One of the reasons Pix took off as hard as it did is because the incumbent instant payment system (TED) only worked during business hours. It basically got digg'd once a 24/7 free service came around to replace it.
It is not true that TED got replaced or killed. In fact, it is still the leading transfer method considering the transaction volume, and by a good amount. Pix leads considering the sheer quantity of transactions. According to Central Bank data[0], in the last quarter, 2.09 trillion USD was settled via TED vs 720 billion USD via Pix.
Pix is great as a payment method for the average person, you use it to split a check and pay for your Uber, but big money still flows mostly via TED and other means.
> Plus the fact that it's operated by the central bank (trust!).
I'm far from an expert or even knowledgeable about finance related matters, but isn't one of the things HN (in general) fearful of with respect to CBDC's the centralization aspect with the government. How is this any different, if any?
The entire world of commerce is trustful, pretending otherwise is silly. FedNow just replaces the extant ACH network, and I assume Pix does something similar. This isn't a CBDC, just infrastructure for moving money between institutions - and even within CBDCs there are privacy-preserving ways of implementing it. Reality is far more banal than some of the more extreme perspectives here.
In Russia we have SBP (system of fast transfers in Russian). It allows to quickly send money by using a telephone number or QR code. It was quite popular for the last 4 years thanks to absence of additional taxes and commissions on small to medium transactions, but since 2022, when Visa and Mastercard left, it became order of magnitude more popular. Almost every shop, small and big, uses it now, although we also have an alternative card system MIR.
It's an incentives problem, not a technology problem. In the United States, interchange is one of the main sources of revenue both for card issuers (both debit and credit). Even though card network rails have their flaws (e.g. fraud, settlement speed, cost), it's unlikely that major banks will adopt another system unless it's as lucrative, or until there's regulatory action that forces them to do so.
UPI[1] exists in India. FedNow[2] recently went live in the United States.
As for why it doesn't exist in every country: it takes a bit of technical work to get the system working and governments move slowly, for better or for worse.
This is actually already quite common in developed countries in reasonable parts of the world. Many countries in Europe, Asia for example have something native. The US has even tried a few times, but seems forever behind the times. Even 3DS is practically a joke in the US.
If you're in America then the latest entry is FedNow.
Things like 3DS benefit issuers and merchants due to lower fraud rates, but take more time, are higher friction and likely lead to fewer payments in total. If something like that doesn't exist or is watered down in the US it's likely because the issuers in the US decided that it wasn't worth the experiential or monetary cost. Or that they have other ways of identifying and dealing with fraudulent transactions, like ML models on the backend.
It's almost certainly a bean counter making that decision - and it's theirs to make - not due to some kind of technical inability to make 3DS work. The US is a low fraud rate market that values faster/easier transactions at point of sale over lower absolute fraud, almost certainly because it maximizes total profit.
Malaysia, Thailand and Indonesia have similar systems. All instant and free. Malaysia system actually works in Thailand and Singapore and has super competitive exchange rates.
PayPay is one of many competing services. From August they're going to stop letting you use other credit cards with PayPay; I suspect (and frankly hope) that will hurt their adoption a lot.
There are others but I've never seen anyone actually use them. Maybe LINE Pay, and people spending d-points.
And while personally I'm going to be affected by their change in credit card rules, everyone I know uses it with cash to get in on their gatcha mechanics. Everyone is surprised when my payment doesn't have the "roll" to see if you won anything.
I've used Line Pay and AU Pay (indeed if we're talking about person-to-person money transfer I've seen more of that with Line than anything else, although of course it's the same company), and I think I've seen the Aeon one get used too. If you include the various tap-to-pay systems then there's a whole lot more.
Australia has Osko, an instant payment system. It's handy, but not as broad as Pix, e.g. Osko is mostly limited to transfers between bank accounts, whereas Pix is widely accepted by merchants, both on-line and brick and mortar.
Osko is built on top of Australia's "New Payment Platform" (NPP). As I understand it, NPP is basically a fast peer-to-peer transaction layer. Based on comments above, it's similar to Pix in that it's implemented by the Reserve Bank and it can use different account IDs (called PayIDs) such as email address or phone number.
PayIDs weren't available to businesses when last I looked, for whatever reason, but I think the Eftpos network also uses the NPP. So you can certainly use this network to make payments to business, but you need an EFTPOS card, and most of the banks issue Visa or Mastercard network cards instead.
It's shocking how fast Pix got inside of Brazillian culture, everyone have it. It's easy to set (you need a bank account), it's easy to use (believe me, even the banks who are known for having terrible UX did a good job with the interface) e just takes a second complete a transaction! With no charges!
It's a great service but honestly I think they just got lucky with how they named it. It's short, easy to pronounce and very memorable. Were it to be called anything else, I'm not sure it would've caught on.
Pretty similar thing works in Kazakhstan and it too is ubiquitous and surpassed Visa/MasterCard a few years ago. Totally displaced cards and cash from payments and from public conscience.
QR, no disputes, instant transfers and public ID seem to be the winning combination.
The only difference being that it is run by a private bank, Kaspi, not a central bank.
First thing that came to mind is: government with record of every transaction anyone makes on this platform. O_o I suppose the counter argument is that's no different than credit cards and banks providing that under government order anyway. So this just cuts out the middleman?
Amazon provided me extra discount on top of a discounted price.
But only for selected products. It's easier and more manageable than my bank credit card rewards.
Also many services like doctors, vets, etc are much easier to pay.
The only upside of CCs are rewards and cashbacks, but if they add too much rules, and exceptions for it, pix becomes the clear winner for the transparency on my expenses.
So even for people on middle to upper middle class it can have more benefits.
I can say for a Russian system which looks similar to me: banks do not charge additional fee (acquiring fee), so it's beneficial for shops and small businesses. It works instantaneously, you don't have to carry your card with you (people now always have phones with them but sometimes forget wallets or cards, also phones are locked and cards can't be locked).
Small business doesn't have to pay for anything but a piece of paper with QR code printed on it.
But the lack of fees are not benefits for the consumers, only for the merchants. Unlike cards, that have several consumer benefits. And you can have them on your phone as well.
Merchants are raising price of goods and services to pay Mastercard/Visa/bank fees. So this can be beneficial for consumers as well.
As of other benefits, this system is much younger, I hope it'll improve with time. I try to use it more often, although actually it's still faster to use the card compared to unlocking the phone and unlocking the bank application to pay with the QR code.
There is little question that, if this becomes the dominant way to settle payments, prevailing prices will decline by an amount proportional to the previous transaction costs. That is obviously a significant benefit to the consumer.
Plus, an easy way to transfer money digitally between individuals (this is my main usage; for paying business I still prefer credit card due to benefits).
1 - you register your keys with your Bank, and it communicates the Central Bank. It can be your "ssn", your phone number, your email or some random id.
2 - to pay somebody, just provide the key. Your institution will look up in the Central Bank database who'll be paid with that key (the destination: Bank, account number)
3 - your Bank withdraw the funds from your account, the destination Bank deposits it (there's a tight time limit), the Central Bank does the compensation among banks.
4 - there's no disput: once you authorized it in your Bank, it's done.
If your Bank provides you with credit, it's a commercial relation between you and your Bank. Pix is just a transfer from your balance, it doesn't involve credit lines and so on.
So, in the end it's simple: money transfer with tight rules made by a Central Bank and obligatory adoption from all Banks.
The keys are the most relevant aspect to the clients: your phone number, your "ssn" ( In Brazil it's called CPF and it's public, it's not a secret number). Just like WhatsApp made it easy by using phone number instead of some login.