A PYMNTS Company

Brazil’s Central Bank Uses Payment Platform To Encourage Competition

By  |  March 28, 2021
Brazil

Brazil’s central bank is revving up its years-long effort to bust up the country’s clubby banking industry, reported The Wall Street Journal.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    The payment system, dubbed Pix, was set up and is maintained by the central bank instead of private payments players, unlike similar systems in other countries. Since its launch in November, Pix is already handling a larger share of digital payments than its private-sector alternatives, advancing the regulator’s goal of spurring competition and getting more Brazilians to use financial services.

    We’d love to be your preferred source for news.

    Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!

    Add as Preferred Source

    Additionally, Brazil’s central bank introduced last month so-called open banking, mandating that institutions share key pricing and credit history data with rivals. That added to recent efforts to encourage the growth of fintechs to give consumers more options and to pull unbanked Brazilians into the formal financial system.

    The push is being watched closely by investors, as financial startups use Pix’s platform to gain market share in a sector where the five top banks held 93% of all assets in 2019, compared with 54% in neighboring Argentina or 41% in the US, according to BankFocus, Moody’s Analytics. Banking concentration in Brazil was higher than in 16 other developed and emerging markets cited by the firm.

    “It’s all about breaking down or challenging the established banking brands,” Chris Ward, a digital-banking researcher and consultant at London-based Informa’s FBX unit, said about the Brazilian experience. “It’s the central bank actually pushing that rather than the fact those banks were undeserving the population as a whole.”

    Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.