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Brazil has officially announced plans for a new recurring payment service using the country’s popular instant payments service Pix, which is designed to enable widespread usage by also targeting underserved customers.
The new feature, called Pix Automatico, will enable businesses, both online and offline, to offer recurring payments for their customers as an option to pay.
Pix Automatico will be designed to fill a significant gap and enable usage for a wide range of businesses, including public utilities, insurance and lending firms, streaming services, subscription clubs, schools, gyms and others.
The service was first mentioned at a conference three weeks ago by Carlos Brandt, the leading mind behind the operation and development of Pix, along with two other key updates, one on cross-border payments and another to support payments across marketplaces.
The central bank has now officially announced that it is working on Pix Automatico and disclosed further details about its plans to enable recurring payments for those businesses and customers that have previously been excluded.
According to the Central Bank of Brazil (BCB), current arrangements are not able to serve all types of customers and all types of businesses.
Direct debits, for example, depend on bilateral agreements with multiple institutions, which means operational complexity and high costs.
This generally restricts the service to large companies, mostly public service providers.
Meanwhile, recurring credit card payments are not available to a significant part of the population as only a limited number of Brazilians meet the criteria to own a credit card.
Pix Automatico will be designed to fill this gap, with promises to enable merchants of all segments and all sizes to be able to engage in recurring payments arrangements with their customers.
For instance, for physical places, such as gyms or schools, the customer can sign a contract with the service provider stating their intention to pay via Pix Automático and providing their bank account details. The customer will then receive a notification in the bank application to confirm the authorisation.
Recurring payments may also be authorised by reading the QR code or via the payment initiator.
“Enabling recurring payments on Pix is essential to democratise access to this type of payment for companies of all types and sizes — the receivers — and for people in general — the payors — offering convenience for both sides,” Brandt said.
He argued that Pix Automatico will bring more competitiveness to the sector as the model is open and can be offered by any institution participating in Pix, including large banks, digital banks, cooperatives, fintechs, payment initiators or others.
Like other Pix services, Pix Automatico will be free for the payer, while businesses may be charged upon receipt.
However, as the Bank for International Settlements (BIS) noted in a 2022 study, Pix typically offers a “much cheaper” alternative to other payment forms such as cards.
For instance, Pix payments cost merchants on average 0.22 percent of the transaction value, compared with the 2.2 percent fee Brazilian merchants pay on a credit card transaction and the 1 percent estimated average fee on debit card transactions.
The BCB will be working on the specifications until August, publishing the rules and guidance in September and working on the development of the system between October and February.
Tests will be carried out in March with plans to roll out the service by next April.
