Cash culture a roadblock to instant payments in Latin America

PIX, the new instant payment system launched by Brazil’s Central Bank, definitively launched on Monday after two weeks of trials. The idea aims at increasing the digitalization of the Brazilian financial landscape, minimizing the parallel economy, and making transactions simpler. However, judging by experiences in Mexico — Latin America’s second-largest economy — implementing such a system is not a straightforward task.

Mexico’s instant payment system Cobro Digital (CoDi) completed one year of operations in September but is still struggling to take hold. Despite the general trend toward digitalization brought about by the Covid-19 pandemic, CoDi has benefitted little.

One of the supplementary goals of national payments systems such as PIX and CoDi is to reduce the use and circulation of banknotes, but the habit of cash-in-hand transactions is proving harder to shift in Mexico. On the contrary, the use of cash rose about 22.82 percent between September 2019 and September 2020. Furthermore, one of the initial phases of CoDi focused on in-person transactions, crushed by the pandemic and its social isolation measures.

Regardless, Miguel Díaz, general director of Payment Systems and Market Infrastructures at the Bank of Mexico, said that “ending the use of cash” was never...