INNOVATION & TRANSFORMATION: THE ACQUIRERS’ DILEMMA Sweet spot: People in Brazil have adopted PIX instant payments much faster than anticipated
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The Central Bank of Brazil’s instant A2A payment tool took less than a year to pass into the language on the street. Now, everyone knows you can ‘make a PIX’ anytime and virtually anywhere. But how has the payments industry responded? Edson Santos, Founder of Colink Business Consulting, and Eduardo Goni, Country Manager Brazil for ACI Worldwide, consider the opportunities and threats The success of the Brazilian Central Bank’s instant payment system PIX has been breathtaking.
Within six months of its launch during the chaos of late 2020, the new mobile service with a simple QR and code key-driven interface, had moved more than BRL 1.109trillion (US $220billion), mostly in person to person (P2P) transfers. A year in, and it had clocked up six billion-plus payments, the total value of the transactions the rail handled had trebled and it was being used by six out of 10 Brazilians – increasingly, for retail payments, too, both on and off line. It didn’t take much to persuade ordinary people – many of whom were in receipt of COVID-19 government support that could only be immediately unlocked digitally – that a payment method which was not only instant (taking roughly two seconds), but available 24/7, free to use, and available to anyone, with or without ffnews.com
a bank account, was a good idea. But, for the payments industry, the speed of adoption was a shock – especially since, in theory, PIX could freeze out acquirers, card schemes and issuers: account-to-account rails don’t need them. According to a survey of 90 senior executives among Brazil’s leading payment institutions, published in January 2022 by ACI Worldwide (Brazil) and locally based Colink Business Consulting, ‘the success of PIX poses an immediate threat to the maintenance of current acquirers’ margins’. Perhaps that’s because they can see what fintech commentator David Birch has described as ‘cardmaggedon on the horizon’. “Ninety-five per cent of the executives we interviewed believe that PIX is going to cannibalise debit card transactions,” says Edson Santos, founder and partner of Colink Business Consulting. “They understand that the acquirer as we know
it today, only capturing, processing and settling payment card transactions, maybe won’t survive. Back in 2020, the great majority weren’t concerned about PIX; they thought it was going to affect banking services more than the acquirer world. It’s an incredible change of attitude.” To be fair, there was a lot going on in 2020. Simultaneous with the arrival of PIX, the industry was having to come to terms with legislation that makes it mandatory for acquirers to publish data to a credits receivable register – a record of future payments that will fall due to merchants from acquirers for credit card sales (usually in 30 days) and against which merchants can raise liquidity. And, of course, all financial institutions were impacted by the introduction of open banking, which has required major banks to integrate a standard set of APIs for the permitted exchange of customer transaction data since 2020. Issue 11 | ThePaytechMagazine
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