Brazil’s Pix Payments: Are Credit Cards Becoming Obsolete?

Perhaps no country acts as a better microcosm for today’s leading payments technologies than Brazil. 

It is home to one of the world’s leading neobanks in Nubank, and its central bank has been quick to adopt and roll out new technologies to make payments easier for banks, merchants and consumers. 

One such innovation is its instant, Pix payment system. A real-time payments (RTP) money transfer method, Pix is fast becoming the favoured way for Brazilians to complete transactions, replacing cash and wire transfers. 

The Pix payments system is not only convenient for consumers but has helped foster a booming e-commerce industry in Brazil – with instant money transfers supporting cash flow in sectors with tight margins. 

Pix payments: The death of the credit card 

Indeed, paying instantly via digital means has seen cash use fall significantly in recent times, already in a slow decline thanks to the popularity of contactless debit and credit card payments.

But as Pix helps deliver instant, simple payments for Brazilian consumers and businesses, it is – most notably – the impact instant payments are having on legacy banks and their existing credit card infrastructures that is of significant note. 

Credit card infrastructures employ technology first founded in the late 1950s, and while market leaders like Visa and Mastercard have long acted as the ‘go-to’ intermediaries for processing payments – Pix removes the need for these ‘middlemen’. 

And, as Pix continues to grow in popularity in Brazil, completing payments through credit card infrastructures – a slower and more cumbersome process – is dwindling. 

In 2022, Brazil’s central bank Chief Roberto Campos believed the introduction of the RTP Pix system would result in “credit cards ceasing to exist at some point soon”. Now, the data is beginning to back that up. 

A report from Abecs, the industry and central bank data group, found that the use of Pix rose 74% in 2023, accounting for a staggering 42 billion payments across Brazil’s economy. 

This surpassed payments processed by debit and credit cards by 23%. 

Pix: Leading the charge for an RTP future

As one of the first RTP systems to be adopted and launched by a central bank, Pix has been joined in recent times by the centralised launch of other RTP systems, such as FedNow in the US, SEPA Instant in the EU and UPI in India. 

Pix does perhaps remain the most well-adopted RTP system to date, with firm market entrenchment of credit card infrastructures in other markers like the US slowing uptake.

Worldwide, RTP systems are inherently domestic and fragmented, unlike dominant credit card infrastructures – such as those provided by Visa and Mastercard as large global companies. 

But now, companies like Volt are penetrating the market by providing a network for different RTP systems to connect. Volt has Pix, alongside other leading central RTP systems signed up to its network. 

Last year, Volt CEO Tom Greenwood told us: “While fragmentation is a challenge for RTP adoption, it’s also an opportunity. We’re positioned in the RTP space to do what Visa and Mastercard did for debit and credit cards.”

He adds: “RTP is a next-gen payments system based on API calls to account-based payment instruments. These allow you to initiate a payment, circumventing card schemes in real-time from one bank account directly to another.”

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