Brazil’s Central Bank published the operating rules for the so-called “Automatic PIX,” which will enable the auto-debit function of the country’s PIX instant payment system, allowing users to authorize the payment of utility bills and recurring services by direct debit from their bank accounts. Another set of publications, including technical manuals, will be released in early 2024.
Offering Automatic PIX will be mandatory for all participants in the system, i.e., banks and payment institutions. Those that do not pass the approval tests and do not make Automatic PIX available to their users when the service is launched — which is scheduled for October 28, 2024 — will be fined up to BRL 50,000 per day for delay.
As we reported earlier this year, the new feature is likely to cut into the service revenues of the major banks, while competing to some extent with the credit card industry.
Today, Brazilian companies and government agencies have to negotiate and sign bilateral agreements with several financial institutions to be able to offer automatic debit payments to their customers, as automatic debit payments are only possible if the payer and the payee have accounts at the same institution.
Through Automatic PIX, businesses and governments will save time and money by replacing several agreements with different fees and terms with a single standardized contract from a single player. Within PIX, they will also be able to quickly migrate from one provider to another.
For the paying user, Automatic PIX will bring more convenience. After prior authorization through their bank apps, users will allow periodic debits to be automatically taken from their accounts without the need for authentication for each transaction.
Among the rules published yesterday by the regulator are specifications for standardizing customer journeys, conventions for canceling transaction authorizations, and the rejection and liquidation of transactions.
The Central Bank also updated the system’s penalty manual, which includes rules for refunds and liability in the event of errors.
A very important point is that PIX’s recurring function — “Scheduled PIX,” currently optional for all participants — will become mandatory in October 2024. Although both features address periodic payment use cases, they have differences.
In Automatic PIX, payment instructions are always provided by the receiving user, which must be a legal entity, with the prior authorization of the paying user. In the recurring function of Scheduled PIX, payment instructions are always provided by the paying user, who may have an individual or legal entity as the recipient.
In less than three years, PIX has become ubiquitous in Brazil thanks to the absence of P2P fees. Central Bank data shows that 35 percent of transactions in Brazil are currently made through the system. At the end of November, there were nearly 144 million individual PIX users (more than 80 percent of Brazilian adults) and 13.3 million business users.
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