Will 2020 see the overhaul of the payments market in Brazil?

PIX, an instant payment platform created by the Brazilian Central Bank, is one step closer to its launch date. On Wednesday, the monetary authority approved and published the regulations for the new platform, which is set to begin operating in November, as the latest addition to the ebullient payments market in Brazil. 

The pandemic has imposed new habits for consumers around the world and, in many cases, it has sped up processes that were ongoing before Covid-19 arrived. In Brazil, changing consumer routines have come together with new technologies in the payments market, many of which are set to come into operation before the end of the year. 

Will 2020 be the year the Brazilian payments industry sees a more radical overhaul?

“The payments market in Brazil ten years ago was extremely concentrated, with elevated tariffs, little competition, and therefore, very high prices, which led even to underutilization of some payment tools such as credit cards,” says Paulo Furquim de Azevedo, coordinator at the Center for Regulation and Democracy with Insper, speaking to The Brazilian Report.

Over the past six years or so, however, a series of decisions have transformed Brazil into fertile land for innovation, according to Mr. Azevedo. He explains that the innovation rush in Latin America’s largest economy has had two main driving factors: the inefficiency of traditional systems, and a more encouraging regulatory environment.

“There is a big group of innovations and startups that are entering this market and causing disruption, and, at the same time, watchdogs have modified regulation, acting towards enabling the development of such businesses,” he says, adding that these measures have also fostered competition.

The Central Bank wants in

PIX is part of the so-called ‘BC# Agenda’ — a plan by Central Bank Chairman Roberto Campos Neto to promote “financial democratization” and digitize the Brazilian economy. One of the pillars of this process is technological innovation. “Despite the recent shifts in governments, the Central Bank has been steady in its...