Costs reflect increased processing and storage capacity, monetary authority says
06/03/2024
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Leandro Vilain — Foto: Leonardo Rodrigues/Valor
As the user base expands and new functionalities are incorporated, Pix— the Central Bank’s instant-payment system—represents increasing costs for the monetary authority, in terms of both maintenance and investment. While the instant payment system has significantly boosted financial inclusion and transaction efficiency, the associated expenses for its implementation and operation have grown.
The implementation costs for Pix up to 2021 amounted to R$13.6 million. For 2024, the forecasted costs are R$25.3 million for maintenance and R$43.1 million for investment. These figures are approximations, as maintenance and investment are generally spread across the entire computing infrastructure of the Central Bank. The data were obtained through the Freedom of Information Act.
According to the Central Bank, the rise in costs is due to the need for continuous expansion of the system’s processing and storage capacities, as well as the addition of new features and security improvements.
Despite the increase, these amounts represent a small percentage of the Central Bank’s allocated budget, which was R$3.9 billion in 2023. Of this total, 92.7% was spent on personnel, social charges, and benefits; another 5.6%, or R$222.6 million, went to maintenance; and 1.7%, or R$69.9 million, to investment.
The Central Bank said that it has prioritized the technology budget, “especially necessary for Pix,” at the expense of other projects. Even so, it described the budgetary scenario for 2023 as “quite challenging” and noted that the investment amount for this year depends on a budgetary reorganization currently being negotiated with the government.
The Federal Budget Department declined to comment, stating it only addresses budget credits whose proposals have been formalized and their effects made public.
With the investments made so far, Pix has reached 149.1 million individuals and 14.2 million businesses since its launch in November 2020. The Central Bank estimates that the system has brought 71.5 million users into the financial system by December 2022, the most recent data available.
Leandro Vilain, a partner at Oliver Wyman specializing in financial services, said that Pix has “cannibalized” cash transactions, which he views as “extremely favorable for the low-income population.” He cited examples of service providers who previously only accepted cash and now accept Pix, broadening their potential clientele and opening up new possibilities.
“You have a portion of the population, like self-employed individuals and taxi drivers who used to receive a lot of cash transactions, small self-employed agents, or day laborers. These people have started to receive money directly into their bank accounts, giving banks the necessary information to provide credit if needed,” he said.
Pix does not charge fees for individual users and has increased the volume of transactions in the financial system. In the third quarter of 2020, 10.8 billion transactions were recorded. By the fourth quarter of last year, that number had risen to 30.8 billion.
Before Pix, the easiest options for transfers were TED and DOC, both of which incurred fees. TED has now largely fallen out of daily use, accounting for just 1% of transactions, while Pix handles 43%. DOC was discontinued by banks this year.
The Central Bank has continuously added features to Pix since its launch. Pix Saque (for drawing cash) and Pix Troco (for change), which allow for cash withdrawals at stores and lottery outlets, are already operational. To enhance security, the system includes precautionary blocking for suspected fraud and a “Special Refund Mechanism” to facilitate reimbursements in fraud cases.
Amid these developments, Central Bank President Roberto Campos Neto has publicly discussed the institution’s budgetary challenges, including reduced funding for certain projects.
At an event in late April, Mr. Campos Neto was asked about potential risks to Pix’s operation. He said that there is currently no significant risk but noted that he had allocated many staff to system security, which has hindered the development of new functionalities.
The launch of Pix Automático (for scheduled payments) was postponed from April to October this year. At the time, amid a working-to-rule movement by Central Bank servants, the delay was attributed to the time required for development and organizational issues. The service will function similarly to direct debit, facilitating the payment of recurring bills such as water and internet.
The Central Bank’s centralized system for Pix has faced criticism from the private sector. While banks and payment institutions acknowledge Pix’s success, they see limitations in an operation run by a public entity with a restricted budget.
In last year’s integrated report, in which the Central Bank outlines its operations, the monetary authority highlighted that the biggest challenge was “maintaining the level of results observed in previous years, especially incorporating technological innovations in the Central Bank’s business areas to support the future financial system, such as Pix, Drex [digital currency], and open finance.”
- Por Gabriel Shinohara — Brasília
- Source: Valor International