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How it works: 1 - you register your keys with your Bank, and it communicates the Central Bank. It can be your "ssn", your phone number, your email or some rand

How it works: 1 - you register your keys with your Bank, and it communicates the Central Bank. It can be your "ssn", your phone number, your email or some random id. 2 - to pay somebody, just provide the key. Your institution will look up in the Central Bank database who'll be paid with that key (the destination: Bank, account number) 3 - your Bank withdraw the funds from your account, the destination Bank deposits it (there's a tight time limit), the Central Bank does the compensation among banks. 4 - there's no disput: once you authorized it in your Bank, it's done. If your Bank provides you with credit, it's a commercial relation between you and your Bank. Pix is just a transfer from your balance, it doesn't involve credit lines and so on. So, in the end it's simple: money transfer with tight rules made by a Central Bank and obligatory adoption from all Banks. The keys are the most relevant aspect to the clients: your phone number, your "ssn" ( In Brazil it's called CPF and it's public, it's not a secret number). Just like WhatsApp made it easy by using phone number instead of some login.

gooseyman 3y ago
This is super helpful. Do you know how fraud is handled (or maybe it’s better mitigated)?
- rbanffy 3y ago
  Probably insurance at the sending end. Must depend on the bank. AFAIK, all transactions, once authorized, are not disputable.
  - rpgbr 3y ago
    Yeap, that’s the case. Pix is awesome, but is being used to scam people all around the country. Our Central Bank is trying to tackle this issue since with new features, such as limiting transaction at night (when kidnapping is more common) and, soon, new disputing mechanisms.
- rodrigodlu 3y ago
  My banks all have different mechanisms, but all around limiting the amount. For instance in one of them I can add trusted accounts for unlimited amounts (it takes a random time from 24 to 48h to get it through), for all others I have a really low limit for transfers between 8pm to 8am and a bit bigger for daylight. Another bank added location detection with gps through the mobile app and I can add the trusted places to make bigger transactions. Let's say I want to buy a car. I can immediately transfer for instance US$ 1000 as a signal of intention, add the car seller as a trusted account, and wait 48h to transfer the rest. In the worst case, If I get abducted by a criminal my bank app mandates the gps to be turned on for any movements. If my family moves fast enough with authorities this can help locate me, and also coordinate with the bank means to monitor the account. On the other hand some abduction criminals are settling with smaller values to move fast and not get caught, but in these cases they will do some gross mistakes. The problem is the police forces doing more mistakes than the criminals. For frauds without physical contact, it increased the amount between elders, but at least in my family we came up with a strong framework to check with someone like me that is more digital literate to provide some "consultancy" to the elders. My dad for instance had a extremely high limit because the bank manager did a mistake, even on a traditional private bank account. I talked directly to the manager explaining that her actions were against the own bank recommendations. And oh, this is not different from the past were the elders were compelled to give money in physical form, with elders hiding this from the family for some reason. The amount of scam in my family is stable for now between the old way versus the new way. The thing just moved faster (it took few hours for the rest of family to find out), but safer (the elder in question didn't need to physically handle the money). It worked well as a cautionary tale.
sschueller 3y ago
Nice to see at least one country managed cut out the middleman that is visa/mastercard as well as the merchant services. We in Switzerland didn't get that lucky. Instead we have a new middle man Twint (partially owned by the banks?) which charges much higher fees to merchants than the credit card companies did. P2p is free which they claim is paid by the bank fees but p2b is of course not. When being pushed why their fees are so high they give you the run around. Of course again the perfect racket because the end customer doesn't know about the fees, they just want to use the app and if as a merchant you don't accept this payment method you loose the business. Because of the fee you also loose usability for the P2p payments. P2b payment is done via qr code, they do everything to prevent you from being able to do a p2p payment with a qr code as it would allow businesses to do p2p payments instead of p2c. For p2p you need to enter someone's phone number or IBAN even if they are standing right next to you.
- rbanffy 3y ago
  I believe banks in Brazil are also free to require a fee from the sender (maybe the receiver as well, not sure) in b2b transactions. P2p fees was one of the items in the previous president's FUD campaign against his opposer, the current president.
  - rodrigodlu 3y ago
    It's not the sender, but the receiver. CNPJ's ("SSNs" for Juridic/Business entities) pay a % of the received money. Many banks, specially the neobanks/fintechs are making it free for small business tho. I have a business to sign contracts for soft dev and I was charged once for a pix transaction between another business account on a different bank. That bank is not my primary anymore, I started transferring using the old system (TED) to avoid it. TED takes ~15 minutes (from 0800 to 1700) instead of <1 sec (24h/7d), so not a big loss for internal transfers. Still using the dumb bank because of other reasons, but not primary. So competition working as intended in this case.
    - rbanffy 3y ago
      And to think some countries still use checks... ;-)
lelanthran 3y ago
> obligatory adoption from all Banks Kinda spoils the whole effect of a headline like "$FOO surpasses credit card institutions". It'd be news if it didn't. That being said, this is probably the best way to move forward with digital payments - if it's under control of the government then: 1. The middlemen are cut out. 2. It only needs to make enough money to sustain itself, not provide profits to shareholders. 3. You can't simply silence people you don't agree with. You can't simply say "we're not allowing parties who don't follow our ideology to perform transactions". Any party who is now not allowed to do transactions by the government were also previously not allowed to do transactions. That being said, I cannot see the major Western governments adopting this approach. Firstly, there's just too many benefits to citizens at the expense of the politicians "lobbying" income, and secondly, governments like being able to shut down certain parties. With Visa/Mastercard they can simply ask Visa/Mastercard to stop transacting with that party and there's no recourse for that party. When the government itself wants to silence that party, their are many more hoops to jump through, and there is still legal recourse.
- rpgbr 3y ago
  It’s obligatory only for major banks. For smaller ones it’s optional, and yet a thousand banks was participating on day one.
- cassianoleal 3y ago
  > Kinda spoils the whole effect of a headline like "$FOO surpasses credit card institutions". It'd be news if it didn't. Not necessarily. The banks are required to implement it and provide it as a service. The real win of the system is actually how good it is, and how in some instances it's better than using cards. These days, whenever I'm there, I favour Pix over cards whenever I can. To me personally, it's not only more convenient in some cases (and the only option in others) but it's also a way of avoiding sending data and money to the likes of Visa and MasterCard. Argentina has adopted the system to attract Brazilian tourists as well, which means as a Brazilian you can get away with a lot there even if you don't have an international card.
  - toomuchtodo 3y ago
samarthr1 3y ago
So, if I understand correctly, the transaction is tripartite, directly tied to both banks? How does recon happen? Is there a float maintained at the central bank for each participant bank? What is the API Access scene like (say for a business building out a payment gateway)? What's the commission like? (Is it taxpayer subsidised?)
- luizcdc 3y ago
  Yes, the transactions is tripartite. Direct API access to the Central Bank's internal system is only given to participating banks. Your bank might make available a separate API through which you can generate temporary QR Codes with a value attached, for instance. This is very common. These QR codes aren't requests for payment in the strictest sense, because they aren't targeted at an user specifically: anyone that scans the QR code can pay. To popularize the system, the central bank forbid the banks from charging for transactions in the first 12 months. That was very contentious because before we had a system called TED which allowed transactions only in business days and within a 1~24h window. Most (not all) banks charged a fixed fee of 1 to 15 BRL per transaction. This revenue source was cut all of a sudden. Now, they allow banks to charge fees for businesses, if they wish. Some banks have fixed fees, some charge up to 1% per transaction (half the fee for debit card transactions in Brazil), sometimes also defining a ceiling (max 130 BRL fee per single transaction).

gooseyman 3y ago

This is super helpful. Do you know how fraud is handled (or maybe it’s better mitigated)?

rbanffy 3y ago
Probably insurance at the sending end. Must depend on the bank. AFAIK, all transactions, once authorized, are not disputable.
- rpgbr 3y ago
  Yeap, that’s the case. Pix is awesome, but is being used to scam people all around the country. Our Central Bank is trying to tackle this issue since with new features, such as limiting transaction at night (when kidnapping is more common) and, soon, new disputing mechanisms.
rodrigodlu 3y ago
My banks all have different mechanisms, but all around limiting the amount. For instance in one of them I can add trusted accounts for unlimited amounts (it takes a random time from 24 to 48h to get it through), for all others I have a really low limit for transfers between 8pm to 8am and a bit bigger for daylight. Another bank added location detection with gps through the mobile app and I can add the trusted places to make bigger transactions. Let's say I want to buy a car. I can immediately transfer for instance US$ 1000 as a signal of intention, add the car seller as a trusted account, and wait 48h to transfer the rest. In the worst case, If I get abducted by a criminal my bank app mandates the gps to be turned on for any movements. If my family moves fast enough with authorities this can help locate me, and also coordinate with the bank means to monitor the account. On the other hand some abduction criminals are settling with smaller values to move fast and not get caught, but in these cases they will do some gross mistakes. The problem is the police forces doing more mistakes than the criminals. For frauds without physical contact, it increased the amount between elders, but at least in my family we came up with a strong framework to check with someone like me that is more digital literate to provide some "consultancy" to the elders. My dad for instance had a extremely high limit because the bank manager did a mistake, even on a traditional private bank account. I talked directly to the manager explaining that her actions were against the own bank recommendations. And oh, this is not different from the past were the elders were compelled to give money in physical form, with elders hiding this from the family for some reason. The amount of scam in my family is stable for now between the old way versus the new way. The thing just moved faster (it took few hours for the rest of family to find out), but safer (the elder in question didn't need to physically handle the money). It worked well as a cautionary tale.

sschueller 3y ago

Nice to see at least one country managed cut out the middleman that is visa/mastercard as well as the merchant services. We in Switzerland didn't get that lucky. Instead we have a new middle man Twint (partially owned by the banks?) which charges much higher fees to merchants than the credit card companies did. P2p is free which they claim is paid by the bank fees but p2b is of course not. When being pushed why their fees are so high they give you the run around. Of course again the perfect racket because the end customer doesn't know about the fees, they just want to use the app and if as a merchant you don't accept this payment method you loose the business. Because of the fee you also loose usability for the P2p payments. P2b payment is done via qr code, they do everything to prevent you from being able to do a p2p payment with a qr code as it would allow businesses to do p2p payments instead of p2c. For p2p you need to enter someone's phone number or IBAN even if they are standing right next to you.

rbanffy 3y ago
I believe banks in Brazil are also free to require a fee from the sender (maybe the receiver as well, not sure) in b2b transactions. P2p fees was one of the items in the previous president's FUD campaign against his opposer, the current president.
- rodrigodlu 3y ago
  It's not the sender, but the receiver. CNPJ's ("SSNs" for Juridic/Business entities) pay a % of the received money. Many banks, specially the neobanks/fintechs are making it free for small business tho. I have a business to sign contracts for soft dev and I was charged once for a pix transaction between another business account on a different bank. That bank is not my primary anymore, I started transferring using the old system (TED) to avoid it. TED takes ~15 minutes (from 0800 to 1700) instead of <1 sec (24h/7d), so not a big loss for internal transfers. Still using the dumb bank because of other reasons, but not primary. So competition working as intended in this case.
  - rbanffy 3y ago
    And to think some countries still use checks... ;-)

lelanthran 3y ago

> obligatory adoption from all Banks Kinda spoils the whole effect of a headline like "$FOO surpasses credit card institutions". It'd be news if it didn't. That being said, this is probably the best way to move forward with digital payments - if it's under control of the government then: 1. The middlemen are cut out. 2. It only needs to make enough money to sustain itself, not provide profits to shareholders. 3. You can't simply silence people you don't agree with. You can't simply say "we're not allowing parties who don't follow our ideology to perform transactions". Any party who is now not allowed to do transactions by the government were also previously not allowed to do transactions. That being said, I cannot see the major Western governments adopting this approach. Firstly, there's just too many benefits to citizens at the expense of the politicians "lobbying" income, and secondly, governments like being able to shut down certain parties. With Visa/Mastercard they can simply ask Visa/Mastercard to stop transacting with that party and there's no recourse for that party. When the government itself wants to silence that party, their are many more hoops to jump through, and there is still legal recourse.

rpgbr 3y ago
It’s obligatory only for major banks. For smaller ones it’s optional, and yet a thousand banks was participating on day one.
cassianoleal 3y ago
> Kinda spoils the whole effect of a headline like "$FOO surpasses credit card institutions". It'd be news if it didn't. Not necessarily. The banks are required to implement it and provide it as a service. The real win of the system is actually how good it is, and how in some instances it's better than using cards. These days, whenever I'm there, I favour Pix over cards whenever I can. To me personally, it's not only more convenient in some cases (and the only option in others) but it's also a way of avoiding sending data and money to the likes of Visa and MasterCard. Argentina has adopted the system to attract Brazilian tourists as well, which means as a Brazilian you can get away with a lot there even if you don't have an international card.
- toomuchtodo 3y ago

samarthr1 3y ago

So, if I understand correctly, the transaction is tripartite, directly tied to both banks? How does recon happen? Is there a float maintained at the central bank for each participant bank? What is the API Access scene like (say for a business building out a payment gateway)? What's the commission like? (Is it taxpayer subsidised?)

luizcdc 3y ago
Yes, the transactions is tripartite. Direct API access to the Central Bank's internal system is only given to participating banks. Your bank might make available a separate API through which you can generate temporary QR Codes with a value attached, for instance. This is very common. These QR codes aren't requests for payment in the strictest sense, because they aren't targeted at an user specifically: anyone that scans the QR code can pay. To popularize the system, the central bank forbid the banks from charging for transactions in the first 12 months. That was very contentious because before we had a system called TED which allowed transactions only in business days and within a 1~24h window. Most (not all) banks charged a fixed fee of 1 to 15 BRL per transaction. This revenue source was cut all of a sudden. Now, they allow banks to charge fees for businesses, if they wish. Some banks have fixed fees, some charge up to 1% per transaction (half the fee for debit card transactions in Brazil), sometimes also defining a ceiling (max 130 BRL fee per single transaction).