By Ralf Germer, Co-CEO & Co-founder, PagBrasil
Four years ago, the Central Bank of Brazil introduced an instant payment system called Pix, enabling transactions to occur in less than 10 seconds, 24 hours a day. The technology was an instant hit, and its use in Brazil has climbed sharply ever since. More than 173 million users have used the payment system in some capacity, and the system is currently responsible for 90% (FEBRABAN, Nov 2023) of the country’s bank transactions.
This ongoing success can be largely attributed to Brazil’s long-standing openness to experimentation: a willingness to try new things is embedded deeply in Brazilian culture. It also helps that Brazil has a young, tech-savvy population that has led digitalization efforts in Latin America.
The result is that—according to PYMNTS—Brazil has become one of the most digitally connected countries in the world, handily surpassing the United States. Nonetheless, despite massive strides, this revolution is just getting started. Fintech companies are now working to internationalize Pix’s operations and make them available to a whole new audience by simplifying payments for tourists visiting Brazil and Brazilians visiting other countries.
Simplifying payments for Brazilians abroad
Historically, Brazilians traveling abroad have had to choose between bad and marginally less harmful options when it comes to payment. There are credit cards, of course, but these have spending limits, which makes big purchases difficult. Credit cards also tend to come with per-transaction markups as high as 10%.
And while cash is somewhat more cost-effective—with typical markups around 3%—it has its downsides, including the well-known inconvenience of seeking out cash-exchange locations. Likewise, while Brazilians abroad often can access their checking and savings accounts to check for balances and such, they cannot always utilize the funds while traveling globally.
In this arena, fintech companies—through integrations with Pix—are poised to change the game. Fintech enhancements of the Pix system enable Brazilians abroad to make payments in their local currency, which is converted in real-time for the foreign merchant, simplifying the payment process on both ends.
Of course, the effectiveness of this technology depends on widespread merchant adoption abroad. However, in travel destinations like New York—which received over one million Brazilian tourists in 2023—the benefits of these integrations on the part of hotels, restaurants, and stores are significant.
Beyond cost-effectiveness and ease of use, Brazilians abroad will be more likely to spend money when they can use Pix. The matter of liquidity is equally important: unlike credit card companies, which typically only settle transactions after 30 days in Brazil (and less time elsewhere, such as one to three days in the US), the Pix system settles transactions instantly. It also helps that merchant integration is simple: Pix can be seamlessly integrated into all the most commonly used POS devices.
Streamlining payments within Brazil
Tourists to Brazil have faced similar payment obstacles, including punishing exchange rates. Given that Brazil received almost 6 million foreign tourists in 2023—who spent a collective $7 billion—simplifying the tourist payment process within Brazil could significantly impact the country’s economy.
Through recent developments in the Pix-oriented fintech space, international tourists and business travelers can now seamlessly plug into the existing Pix infrastructure by scanning a Pix QR code. The transaction cost in Brazilian Real converts instantly into the visitor’s currency, with the payment settled using the payer’s digital wallet or bank funds. Crucially, this process is simplified for merchants who do not need to invest in new hardware or undergo complex setup processes—the acquirer instead handles the technical integration.
Both of these developments speak to the great irony of our modern, cloud-first era: that it is at once hyper-connected and pointlessly siloed. Any cross-border consumer transaction requires the compliance of half a dozen financial institutions whose rules conspire to fleece the consumer and the merchant.
Pix and the enhancements to the Pix system furnished by Brazil’s thriving fintech sector present a more fluid, adaptable world vision. The stress accompanying foreign travel—the scramble to find an exchange station, for instance, or the awful feeling of watching all those credit card fees pile up—melts away. What replaces it is a process so frictionless you hardly have to think about it.
Ideally, the Pix system and its private-sector enhancements can serve as a model for the rest of the world. Imagine a line of tourists at a Florida or New York sandwich shop, each paying in their currency using the same POS, converting effortlessly on both sides of the transaction, and at a markup much less than that typically permitted by credit card companies. This has always been the promise of consumer fintech—and Pix is helping to realize it.
About the Author
Ralf Germer is the co-founder and co-CEO of PagBrasil. Ralf has extensive experience in business management, international business development, marketing, online sales, and payment processing. Prior to PagBrasil, he was Vice President of Product Marketing Europe at Actebis and later founded 4M Iberoamérica. With degrees in Engineering and Business Administration, Ralf is deeply passionate about the convergence of entrepreneurship and technology and enjoys the opportunity to collaborate with professionals from around the globe.
As a leading Brazilian payments technology company, PagBrasil facilitates advanced payment processing for local and global digital businesses through cutting-edge technology and tailored payment solutions.