PIX Garantido: The Future of Installment Payments in Brazil

PIX Garantido: The Future of Installment Payments in Brazil
PIX Garantido: The Future of Installment Payments in Brazil

Hey Payments Fanatic!

Much is said about the impact of Pix on cards in Brazil. Introduced at the end of 2020, Pix has been highly successful in gaining acceptance among retailers and consumers.

In the left graph (annual basis), we see that from the introduction of Pix (marked), the total volume curve for credit cards changed, accelerating in growth, while the same was not observed for debit cards, which show stagnation starting from 2022.

PIX Garantido: The Future of Installment Payments in Brazil

The right graph provides a more recent observation (quarterly basis), considering the total volumes of cards and also Pix in the P2B (person-to-business) mode, which is the type of transaction most comparable to card transactions.

This observation confirms a greater comparative acceleration of Pix, with a negative trend in the debit card curve. However, in the case of credit cards, growth remains steady. So far, the negative impact of Pix on cards is evident only against debit cards.

Meanwhile, The Central Bank of Brazil is working on developing the "PIX Garantido" which will enable customers to make installment payments through this payment system once it is implemented.

This feature could serve as an alternative to credit card installments, a popular method for high-value purchases. The Central Bank has not provided further details about PIX Garantido or whether interest will be charged on these transactions.

The Brazilian Federation of Banks (Febraban) explained that for PIX Garantido, customers need to have money in their checking account to make payments on the installment due dates.

In August last year, the president of the Central Bank, Roberto Campos Neto, said that PIX Garantido would offer an installment payment option to customers.

At that time, one of the proposals under discussion, which was not implemented, was the end of credit card revolving credit and the installment payment of the outstanding balance with lower interest rates. This was in line with a law passed by Congress, which limited the credit card outstanding balance effective January this year.

While working on the rules for PIX Garantido (installment payments for products and services), the Central Bank plans to launch two new modalities in October: automatic PIX and scheduled recurring PIX.

These modalities, allowing scheduled payments from customers' accounts, are similar to PIX Garantido (installments).

According to the regulation for automatic and scheduled PIX, if there are insufficient funds in the payer's account on the due date, notifications will be sent, and new attempts will be made in the following days.

Automatic PIX can be used, for example, to pay:

*Water and electricity bills

*School and college fees

*Gym memberships and condominium fees

*Loan installments

These payments can already be made via direct debit, but the Central Bank believes automatic PIX will reach more people.

With automatic PIX, companies won't need to sign a contract with each financial institution, just an agreement with one bank offering this service to businesses.

Cheers,

Marcel


INSIGHTS

๐Ÿ‡ธ๐Ÿ‡ช Klarna CEO Sebastian Siemiatkowski led the rise from a profitable business to their peak of almost $๐Ÿฑ๐Ÿฌ ๐—ฏ๐—ถ๐—น๐—น๐—ถ๐—ผ๐—ป ๐˜ƒ๐—ฎ๐—น๐˜‚๐—ฎ๐˜๐—ถ๐—ผ๐—ป, in which they were burning $๐Ÿญ๐Ÿฑ๐Ÿฌ ๐—บ๐—ถ๐—น๐—น๐—ถ๐—ผ๐—ป a month. This and more in Logan Bartlettโ€™s latest podcast episode๐Ÿ‘‡


PAYMENTS NEWS

๐Ÿ‡ณ๐Ÿ‡ฑ Ant Group announced that it completed the acquisition of MultiSafepay, one of the leading payment service providers in the Netherlands / Belgium / Luxembourg (Benelux region) targeted at the SME and lower-end enterprise market. Through this acquisition, Ant will bolster its global capabilities in the Netherlands and across Europe

๐Ÿ‡บ๐Ÿ‡ธ Swiftcrypt Exchange has launched a new cross-border payment solution designed to provide users with secure and cost-effective payment services. Built on blockchain technology, the solution enables instant settlement and transparent fund flow, simplifying traditional cross-border payments.

๐Ÿ‡ฌ๐Ÿ‡ง UK Fintech Modulrโ€™s embedded payments give Multifi access to real-time payment rails including faster payments, SEPA Instant in EuropeMultifiโ€™s mission is to simplify finance for small businesses. Unlike traditional banks, its streamlined process allows businesses to obtain an indicative credit limit with just a few details entered.

๐Ÿ‡บ๐Ÿ‡ธ US start-up Arrow emerges from stealth aiming to streamline healthcare payments. Formerly known as Walnut, Arrow has emerged from stealth offering the US healthcare sector a range of tools that enable โ€œfast and accurateโ€ payments for both healthcare providers and payers.

๐Ÿฆ Five Asian markets to link domestic instant payment schemes. The Bank for International Settlements is to move toward live implementation of Project Nexus, an initiative that seeks to enhance cross-border payments by connecting multiple domestic instant payment systems globally.

๐Ÿ‡ธ๐Ÿ‡ฌ Mastercard and Wilson Sonsini FinTech experts to join Pomelo Group Advisory Board. Mr Joshua Kaplan, Wilson Sonsiniโ€™s partner and former COO of Checkout.com, and Mr Sapan Shah, Senior VP of Mastercard and Head of Acceptance APAC, were appointed to the Advisory Board. They will advise Pomeloโ€™s leadership team on strategic decisions, product, customer and partnership initiatives.


GOLDEN NUGGET

Apple announced "Tap to Cash" at its annual WWDC event, the newest payment innovation by the Tech Giant ๐Ÿ‘‡

๐–๐ก๐š๐ญ ๐ข๐ฌ ๐“๐š๐ฉ ๐ญ๐จ ๐‚๐š๐ฌ๐ก?

"Tap to Cash" is a new feature introduced by Apple, aimed at enhancing digital transactions. It allows users to convert their Apple device into a digital wallet that supports various payment methods, including contactless payments, making financial transactions more seamless and efficient โ€” ultimately competing with PayPal, Square, Google Pay, and many others. It enhances the utility of Apple devices by integrating more financial services.

๐”๐ฌ๐ž ๐‚๐š๐ฌ๐ž๐ฌ & ๐‘๐ž๐ฅ๐ž๐ฏ๐š๐ง๐œ๐ž:

๐Ÿ”ธ ๐‘๐ž๐ญ๐š๐ข๐ฅ ๐“๐ซ๐š๐ง๐ฌ๐š๐œ๐ญ๐ข๐จ๐ง๐ฌ: Allows users to make payments at physical stores using their Apple devices.

๐Ÿ”ธ ๐๐ž๐ž๐ซ-๐ญ๐จ-๐๐ž๐ž๐ซ ๐๐š๐ฒ๐ฆ๐ž๐ง๐ญ๐ฌ: Facilitates quick and easy money transfers between individuals.

๐Ÿ”ธ ๐Ž๐ง๐ฅ๐ข๐ง๐ž ๐๐ฎ๐ซ๐œ๐ก๐š๐ฌ๐ž๐ฌ: Simplifies and secures online transactions by using Apple's secure payment infrastructure.

"๐“๐š๐ฉ ๐ญ๐จ ๐‚๐š๐ฌ๐ก" ๐ฑ ๐“๐จ๐ค๐ž๐ง๐ข๐ณ๐š๐ญ๐ข๐จ๐ง โ€” ๐‡๐จ๐ฐ ๐ข๐ญ ๐ฐ๐จ๐ซ๐ค๐ฌ

Apple's "Tap to Cash" utilizes tokenization to secure transactions. This process ensures that actual card details are not transmitted during transactions, thereby reducing the risk of fraud.

๐Ÿ”ธ ๐“๐จ๐ค๐ž๐ง ๐†๐ž๐ง๐ž๐ซ๐š๐ญ๐ข๐จ๐ง: When a payment method is added to Tap to Cash, a token is generated by the payment network.

๐Ÿ”ธ ๐“๐ซ๐š๐ง๐ฌ๐š๐œ๐ญ๐ข๐จ๐ง ๐๐ซ๐จ๐œ๐ž๐ฌ๐ฌ: During a transaction, this token, along with a cryptographic key, is used to authenticate and complete the payment.

๐Ÿ”ธ ๐’๐ž๐œ๐ฎ๐ซ๐ข๐ญ๐ฒ: Since tokens are useless if intercepted, this significantly enhances transaction security.

4 ๐Œ๐š๐ฃ๐จ๐ซ ๐๐ž๐ง๐ž๐Ÿ๐ข๐ญ๐ฌ ๐จ๐Ÿ ๐ญ๐ก๐ž "๐“๐š๐ฉ ๐ญ๐จ ๐‚๐š๐ฌ๐ก"

1๏ธโƒฃ ๐„๐ง๐ก๐š๐ง๐œ๐ž๐ ๐’๐ž๐œ๐ฎ๐ซ๐ข๐ญ๐ฒ: Tokenization minimizes the risk of fraud by not exposing actual card details.

2๏ธโƒฃ ๐‚๐จ๐ง๐ฏ๐ž๐ง๐ข๐ž๐ง๐œ๐ž: Simplifies the payment process, making it faster and more user-friendly.

3๏ธโƒฃ ๐ˆ๐ง๐ญ๐ž๐ ๐ซ๐š๐ญ๐ข๐จ๐ง: Works seamlessly with other Apple services and devices, enhancing user experience.

4๏ธโƒฃ ๐•๐ž๐ซ๐ฌ๐š๐ญ๐ข๐ฅ๐ข๐ญ๐ฒ: Supports multiple payment methods and use cases, from retail to P2P transactions.

๐‡๐จ๐ฐ ๐Œ๐๐€๐๐ฌ ๐ข๐ฆ๐ฉ๐š๐œ๐ญ "๐“๐š๐ฉ ๐ญ๐จ ๐‚๐š๐ฌ๐ก"

When a user registers a payment card with Apple's Tap to Cash, a token is generated, and an MPAN is associated with this token. This MPAN is specific to the device and the merchant, adding an extra layer of security.

Apple's "Tap to Cash" feature marks a significant advancement in digital payments, offering enhanced security, convenience, and seamless integration. By leveraging tokenization (MPANs), it ensures safer transactions, making it a robust solution for both consumers and retailers.

Apple hit $3 in market cap showcasing its continued innovation and potential impact on the digital payment industry ๐Ÿš€

Source: Apple

And I highly recommend following my partner at Connecting the Dots in Payments... Arthur Bedel ๐Ÿ’ณ โ™ป๏ธ for more great updates like this one๐Ÿ‘Œ


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