Brazilian e-commerce will never be the same after PIX
PIX, Brazil's instant payment system controlled by its Central Bank, will be put to the test next November 3rd, a few days before its official debut (November 16th) and Black Friday (November 27th), the biggest event for Brazilian e-commerce. More inclusive and faster than any other payment method, PIX is expected to change this industry in a matter of months, not years.
"Of all the sectors that will be positively impacted by PIX, e-commerce will be the most benefited. Today, the predominant forms of payment are the credit card and the boleto bancário (a type of cash voucher or bank slip that Brazilians use to pay bills and purchases). On the one hand, the boleto shows incompatibility with services that require real-time operability, since it takes one to two days to clear and complete the transaction, on the other hand, credit card excludes many people because it requires a credit record, and other entry requirements most consumers don't have. PIX covers these both gaps", explains Carlos Eduardo Brandt, deputy head of Brazil's Central Bank payments and banking operations department, in an interview with LABS.
He says that the Central Bank works with possible scenarios for the impact of PIX in several areas, but that it does not disclose them publicly so as not to influence expectations or guide decisions by financial agents.
Looking at the current online consumer behavior in the country and the effects of the forced digitization promoted by the COVID-19 pandemic in recent months, however, it is easy to understand Brandt's statement about the impact of PIX in the sector – or even why banks and fintechs have entered in a race to ensure that their customers register their PIX access keys soon in order to start using PIX through them from the very first day.
In 2019, according to data from Americas Market Intelligence (AMI), 60% of the nearly $40 billion spent within the Brazilian e-commerce occurred through national and international credit cards. Boletos came next, with 17% of that volume. Between 2018 and 2019, the volume of spending through these two methods grew by 6% and 7%, respectively.
At the same time, debit cards and digital wallets saw their shares increase 40% and 10%, respectively, to 4% and 14% of the total volume of spending.
With the amazing growth of fintechs and digital wallets in the last few months in the country – the Brazilian neobank Nubank closed September with 30 million customers, and digital wallet PicPay, with 33 million users –, these last two payment methods should definitely change their level in 2020.
What level? Hard to know. Many experts believe that digital wallets may overtake boletos this year.
Others say that the boletos share will be partly taken up by digital wallets, partly captured by debit cards, which not only have the advantage of being old acquaintances of Brazilians in the physical world, but of being the main payment method, in a virtual version, of the more than 97 million social accounts opened by state-owned bank Caixa Econômica Federal for the transfer of COVID-19's emergency aid.
Furthermore, the arrival of the PIX in the last two months of 2020 should steal a part of all the other methods already mentioned -which means that, as we say in Portuguese, PIX will "colocar a bola embaixo do braço"¹ and change the payments industry for good.
What makes PIX a revolution
PIX only requires a transactional account to operate, which can be a traditional bank account or a digital payment account offered by fintechs. "Payments are the first step in this broader financial inclusion process because payment is something you do every day. You don't take out a loan every day, you don't take out insurance every day, but you pay every day or almost every day," stresses Brandt.
Another important point is the speed of PIX transactions, combined with its lower costs. Tests done so far, with the appropriate security layers, such as encryption of access keys or even machine learning applications capable of "learning" the typical behavior of each user, show that a transaction within PIX takes less than 1 millisecond (something much faster than the "up to 10 seconds" promised by the Central Bank back in February, at the launch of the system schedule).
For individuals, PIX will be completely free. For businesses, a substantial cost reduction is also expected – banks and fintechs have avoided passing numbers to avoid revealing their strategies before the official debut of the system, but the Central Bank itself intends to charge only BRL 0.01 for every ten transactions, a cost not yet experienced in the Brazilian market.
While Nubank says it will not charge entrepreneurs for transactions with PIX, acquiring companies like Stone are enabling PIX as part of a larger package of services already offered by them to businesses, as a way of defending that there will be room for all means of payment and that entrepreneurs must continue offering all the possible options to their customers.
In the specific case of e-commerce, the availability and interoperability of PIX are two other very important factors. From 6:30 am on November 16, the PIX will operate 24 hours a day, every day of the week, making room for the automation of a series of crucial stages in the customer journey.
