Brazilian instant payment Pix system ended 2021 with more than 8 billion transactions, according to Statistics of the country’s Central Bank. This is a pretty impressive number for an offering that just launched in November 2020 and shows how ubiquitous Pix has become in the country.
You could describe Pix as “a government-built version of Venmo,” as João Pedro Thompson, founder of fintech Z1, told Ploonge. However, the analogy doesn’t fully capture the fact that Pix attracts much more than just digitally savvy teens reciprocating friends for coffee. Otherwise, it would not be used by six out of 10 Brazilians.
In a country where many people still don’t have a bank account and queuing to pay bills is part of everyday life, the impact of being able to pay anyone instantly cannot be underestimated. In addition, Pix now supports more services, such as allowing you to withdraw money from companies.
Interestingly, Pix is an institutional initiative, part of a broader range of public efforts to transform Brazil’s financial landscape. “The Central Bank has done a tremendous job and Pix is one of the most relevant structural changes”, Brazilian VC Bruno Yoshimura told Ploonge when we wrote about the fintech boom in Latin America.
I lived in Brazil, so this naturally piqued my interest. At the time, businessmen constantly complained about bureaucracy, and their biggest hope was that institutions would simply stay out of the way. But now, VCs and founders are really praising the Central Bank for its initiatives and the opportunities it has created.
“Both Open Banking and Pix will level the playing field for new challenges, and we expect to see a lot of innovation around them,” Yoshimura said, referring to another central bank project.
It’s not just Pix, and it’s not just the Central Bank BC# schedule any. The Superintendence of Private Insurance in Brazil (Susep) is working open insurance plans, which means insurtechs could be the next industry to benefit from regulatory tailwinds.
To understand what is happening with regulations in Brazil and how it is affecting startups, I reached out to experts with first-hand knowledge of the Latin American fintech ecosystem.
On the VC side, I got in touch with Amy Cheetham, partner at Costanoa Ventures, whose recent investments include Plug do Rio de Janeiro; and Alma Mundi Enterprises‘ Javier Santiso for additional thoughts on insurtech. On the startup side, I talked to CEOs Rodrigo Teijeiro from RechargePay and Pedro Sonego de Oliveira from TruePay.
“The open banking initiatives adopted by the Central Bank of Brazil are absolutely favorable to fintech innovation,” said Costanoa Amy Cheetham he said. “As consumers regain control of their data, this creates space for new entrants to the banking ecosystem and creates more competition, giving consumers access to better, cheaper, fairer and safer financial products and services. This includes giving fintechs the power to build for [underserved] or unserved segments of the population,” she explained.
RechargePay is one of the startups that is taking advantage of new regulations to expand its B2C services. “Our mission at RecargaPay,” said founder Teijeiro, “is to democratize mobile payments and financial services in Brazil, so open banking and Pix are the perfect recipe to accelerate our mission.”
Teijeiro particularly appreciates Pix and its “incredible” trajectory. “What was accomplished in just one year was a tremendous disruption that benefited millions of Brazilians by making their payments easier, faster and cheaper. For that reason, the Central Bank of Brazil deserves to be recognized as the ‘fintech startup of the year,'” he said, describing Pix’s impact on mobile money as “a huge blessing for RecargaPay.”