2023-Public-Sector-Perspectives

Governments Leading Digital Transformation: Instant Payments in Brazil B razil’s Pix instant payment system was launched by Banco Central do Brasil (BCB) in November 2020 in the middle of the COVID-19 pandemic. Pix has proved a phenomenal success and become a part of everyday life for Brazilians. As of September 2022, there are almost 137 million registered users (out of a population of 213 million). Around R$1.02 trillion ($195 billion) has been transacted via Pix so far. Fabio Azevedo Head Public Sector Brazil, Citi Newton Amorim Relationship Manager for Public Sector and Sanitation Brazil, Citi Andre Bezinelli Head of Payments and Receivables TTS Brazil, Citi Leandro Ivo Market Manager of Payments and Receivables TTS Brazil, Citi Antonio Albuquerque Segment Head TTS Sales Brazil, Citi Alfredo Martinez Public Sector Latam, Citi The Brazilian public’s embracing of Pix, which initially was used mostly for P2P payments, has created opportunities for companies and public sector entities to use the instrument. The opportunities are sizeable. As well as improving convenience for users, Pix can significantly lower costs associated with billing and collection processes. Already a number of public sector entities have adopted Pix and more are likely to follow. Why has Pix been so successful? There are now dozens of instant payments systems in operation around the world and many more will be launched in the coming months and years. Few, if any, have achieved such scale and ubiquity as quickly as Pix. Several factors have driven Pix’s success: 1. The BCB — which had the primary goal of extending financial inclusion and operates Pix on its rails — made it mandatory for banks and other large financial institutions to participate in Pix. It was helped by the high concentration of Brazil’s banking system among a handful of institutions (although Pix payments can be initiated via the app of more than 800 institutions — almost every payment service provider in Brazil). 2. The timing of the launch turned out to be fortuitous. During the pandemic, the government made “coronavoucher” payments to financially vulnerable citizens to provide support as the economy slowed. In order to receive those payments, citizens required a bank account. As a result, Brazil’s large unbanked population moved swiftly to open new bank accounts: more than 30 million new accounts were created. Many took advantage of digital accounts and offerings from fintechs, which made it quick and easy for people to open accounts on their smartphone. Citi Perspectives for the Public Sector 39