PIX poised to disrupt recurring payments in Brazil

Brazil’s instant payment system PIX is about to disrupt another source of revenue for the country’s banks. 

After replacing virtually all previous alternatives for peer-to-peer transfers, the system is set to launch a new feature in April 2024 called “automatic PIX,” which will enable PIX’s auto-debit function, allowing users to authorize the payment of utility bills and recurring services with direct debits from their bank accounts. 

As we reported earlier this year, the new feature is likely to cut into big banks’ service revenues while competing to some extent with the credit card industry.

​​”We look at the issue from another point of view; we don’t see PIX ‘stealing markets’ or replacing tools, but as meeting needs that are currently unmet. Deficient products are likely to be affected [by competition from instant payment systems], of course. But our focus is to serve the widest possible range of consumers and companies,” Carlos Eduardo Brandt, deputy head of competition and financial market structure at the Central Bank, tells The Brazilian Report.

Today, Brazilian companies and government agencies have to negotiate and sign bilateral agreements with several financial institutions to be able to offer automatic debits to their customers — because automatic debit payments are only possible when the payer and the payee have accounts at the same institution.

“Through automatic PIX, companies and governments will save time and money by replacing several agreements with multiple fees and terms with just one standardized contract from a single player. Within PIX, they will also be able...