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Opinion

Banco do Brasil disrupts payments

Brazil’s central bank launches a free instant-payments tool.

Banco-do-brasil-HQ-R-960.jpg
Banco do Brasil's headquarters in Brasilia

Brazil’s banks, which have been facing insurgent competition from a raft of fintechs and new digital banks in recent years, now face a new threat from an unexpected source.

The country’s central bank has entered the payments arena with its instant-payments tool Pix. And whereas new competitors have sought to undercut the banks’ longstanding and hefty fee income, the central bank’s offering will be free.

Banco do Brasil is also mandating that all financial institutions with more than 500,000 clients have to offer Pix to their account holders.

Moody’s says that the incumbent banks could lose up to 8% of their annual transfer-fee income – a pool that has grown 31% since 2017. The central bank reports that it has already had more than 39 million registration requests for Pix, individual and corporates combined.

Phone payments

Mobile phone-based payments are a huge potential source of financial growth. According to Bloomberg, there are 205 million phones in a country of 212 million people – 45 million of which have no bank account.

And there are similar dynamics throughout the region: half of the population of Latin America doesn’t have a bank account, and consultancy PayNXT360 predicts that mobile payments will hit $302.7


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