One of the joys of my quarter-century living and working in Brazil, and learning Portuguese, has been the subtle — sometimes dry, sometimes sardonic — Brazilian wit. Much of it is nigh on impossible to translate directly into English.
One such expression is O Pix caiu — the Pix has dropped. It is generally used to imply that someone has received undue payment or benefit (usually a bribe) and is now performing their end of the dirty deal. It is intended to be a humorous expression, but US President Donald Trump for one, fails to see the funny side.
Pix is a free instant payment system that the Brazilian Central Bank launched in 2020. It has obliterated expensive electronic funds transfers (EFTs) in Brazil, and is well on its way to replace payments that were traditionally made with credit cards issued by companies such as Visa, Mastercard and Amex. SA has copied this system and called its version Payshap, but it has yet to take off here — probably because unlike Pix it is not free.
Almost everything can be paid with Pix in Brazil. Each person creates a “Pix key”, which can be a telephone number, email address, ID number or, in the case of companies, a business registration number.
Businesses that accept Pix display QR codes, which clients scan using their mobile banking apps to make payments. The latest point of sale equipment creates custom QR codes that are tailor-made for each transaction.
As the money is available immediately in the account of the beneficiary, for free, the payment system presents advantages traditional credit and debit cards lack.
The system has been expanded constantly, now even allowing for debit orders, pensions and social security payments to be paid, and credit to be extended, using Pix. Billions of real are spent using Pix annually.
Neighbouring countries that rely heavily on Brazilian tourists have also started to accept payment from Brazilian bank account holders via Pix, the catch being that the establishment must also have an entity in Brazil with a local bank account and Pix ID.
The Pix revolution is so big that upon arrival at Buenos Aires airport in neighbouring Argentina there are big advertisements advising Brazilians that they can make their purchases of dulce de leche using Pix. The convenience of doing away with international credit card transaction fees, currency conversions and taxes, with the ability to make payments in real, is most appealing to the brasileiros.
This presents a unique opportunity for Brazil to attract investments of foreign companies that can act as clearing houses for those companies that want to accept Pix payments in their home countries. France is already rolling out Pix payments, and there is no reason a Brazilian business operating in SA cannot accept payments from Brazilians via Pix.
Everyone seems to rave about it, except Trump (and possibly his vocal Brazilian supporters, who bizarrely applaud Trump’s sanctions and tariffs imposed on their own country). When on July 15 he announced his investigation of Brazil’s “unfair trading practices” (which ultimately resulted in the 50% import duties on Brazilian exports to the US), one of the justifications for the investigation was stated as follows: “The investigation will seek to determine whether acts, policies and practices of the government of Brazil related to digital trade and electronic payment services … are unreasonable or discriminatory and burden or restrict US commerce.”
This was widely seen to hint at Brazil’s Pix payment system. Since virtually all transactions Brazilians undertook via American-branded credit cards in the past, from ordering food delivery to buying first-class international air tickets, can now be done with Pix, people are increasingly abandoning credit cards. And with a population of 210-million, this is a problem for US-based Visa, Mastercard, Amex and others.
Brazilian President Lula da Silva has characterised the attack on Pix as a bad case of jealousy by the US, and an attack on Brazil’s sovereignty. It certainly appears as if the Trump administration thinks other countries owe the US a duty to use its products, and that any initiative by Brazil to make life easier and cheaper for its own citizens that means they stop using American products (such as credit cards) is a threat to American interests and must be stopped.
The US has never explained precisely how Pix could conceivable threaten American interests. If the problem is indeed that Brazilians are favouring Pix over American credit cards, it seems the problem may lie with America rather than Brazil.
The investigation notice justifies the action by saying “Brazil may undermine the competitiveness of US companies engaged in these sectors, for example by retaliating against them for failing to censor political speech or restricting their ability to provide services in the country”.
That is almost an acknowledgment that American technology can’t keep up, so now the only alternative is to bully Brazil. The justification itself is grossly misleading and disingenuous. How exactly is a credit card brand involved in free speech? It seems clear that Trump is trying to conflate two unrelated issues in an attempt to attack Pix.
Yet Brazil has not prohibited anyone from using American-branded credit cards. There are still some dinosaur businesses in Brazil that only accept credit cards, and all businesses that accept Pix payments still accept credit card payments.
But credit card payments in Brazil are undoubtedly dwindling, as the convenience of Pix rapidly overtakes credit cards. That is not a policy aimed specifically at US credit card companies, but rather a reflection that outdated credit card payment systems have not kept up with the latest disruptive technology.
For that America should rather ask why its own innovation has lagged behind that of countries such as Brazil that it traditionally regards as its backyard. Maybe it has something to do with the sizeable portion of the American population that believes humans and dinosaurs cohabited planet earth in the last 6,000 years.
Whatever the reason, America would be well advised to improve its own competitiveness and ingenuity to keep up with the rest of the world, rather than rely on bullying tactics against its partners for being smarter (SMRT, as Homer Simpson calls it while his house burns down) than they are.
Meanwhile, Brazil is not taking any chances; the Brazilian Central Bank has recently increased Pix’s security against hacking and other forms of electronic abuse.
• Myburgh is an attorney practising in SA and Brazil.
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