Inspired by Pix, instant payments are moving forward in Latin America

Instant payments are moving forward in Latin America, but a strong stance from local regulators is needed to drive critical change, according to fintech executives who spoke at a payments summit in Brazil on the success of Pix.

With Pix blazing the trail, instant payments are surging by a staggering 55% each year across the region, according to data compiled by Ebanx, a fintech from Brazil. Although no other country has matched Brazil’s widespread adoption of real-time payments, numerous regional central banks have introduced their own versions, aspiring to replicate Brazil’s success.

In the past few years, Argentina, Bolivia, Mexico, El Salvador, Peru and Costa Rica have all rolled out some form of instant payment. Colombia, among the three largest economies in South America, is gearing toward that direction. This May, it created the Payment System Forum, through which it expects to develop a real-time payment system together with the private sector.

However, fintech experts argue that a firm regulatory approach is essential to foster substantial adoption and catalyse significant change. In several major regional economies, powerful banking oligopolies dominate, with only a few traditional institutions boasting a significant share of the credit and payments market.

“Regulators are pushing for this agenda, and it will forever change payments,” Wagner Ruiz, co-founder at Ebanx, said in an interview on the sidelines of Ebanx Payment Summit in São Paulo. “They are using their power to enforce their status. And this is happening everywhere.”

Wagner Ruiz, Co-fundador at Ebanx.

Not easy to replicate Pix

Pix emerged in late 2020 as part of a broad financial innovation agenda championed by the central bank. Today, over 140 million in the country use it for both in-store and online transactions. In the streets of Brazil, QR codes have become ubiquitous. The system now reports a staggering $300 billion per month and is growing.

In a country with a strong bank dominance, where the five major lenders concentrate over 70% of the loan market, the central bank made it compulsory for all major institutions to hop on board. Roughly 800 companies – from fintechs to banks to credit unions – are part of this digital system. This way, they can offer a relatively standardized user experience.

To be sure, replicating Pix elsewhere is not a done deal. Its wide success marks an uncomfortable comparison with CoDi, its older brother in Mexico. CoDi was introduced by Mexico’s central bank even earlier, in 2019, but as of yet, it has gained minimum adoption and only $0.5 billion in accumulated transactions since then, compared to $300 billion every month in Brazil.

Four years later, cash remains king in Mexico. CoDi is heavily dominated by a few banks, with three major lenders reporting 90% of all user accounts.

Instant payments in Latin America

The remarkable success of Pix in Brazil, surpassing the popularity of credit cards, has served as a source of inspiration for neighboring countries. It has emerged as a pivotal instrument for promoting financial inclusion in emerging economies and has garnered recognition and praise from international organizations like the International Monetary Fund.

“We’ve seen strong adoption from young individuals from all income levels,” Carlos Brandt, Pix Management chief at the central bank, said at the conference. “There is a lot of trust in the system, and Pix has been a potent tool for financial inclusion, with millions doing their first digital transaction through it.”

Elsewhere in the region, Colombia is building its system, while other countries already have some kind of version. In Argentina, Mercado Libre, the Amazon of Latin America, has played a key role in advancing QR payments throughout the country. At some point, the central bank launched Transfers 3.0 in 2021, enabling QR code interoperability among all financial institutions. This year, it hit 200 million monthly transactions, surpassing debit cards.

Smaller countries like El Salvador, Panama, and Costa Rica are also promoting real-time payments through initiatives like Transfer365, Wallet 2.0, and Sinpe Mobile. Bolivia, too, introduced QR BCB in order to drive QR payments in the country.

For Wagner Ruiz, a co-founder at Ebanx, the region has a clear trend toward real-time payments. “Every kind of payment will be instant in the near future,” he said in an interview. “Not just here in Brazil, but everywhere across Latin America, it is becoming increasingly a reality.”

  • David Feliba

    David is a Latin American journalist. He reports regularly on the region for global news organizations such as The Washington Post, The New York Times, The Financial Times, and Americas Quarterly.

    He has worked for S&P Global Market Intelligence as a LatAm financial reporter and has built expertise on fintech and market trends in the region.

    He lives in Buenos Aires.