The U.S. Treasury’s Bureau of Fiscal Service provides central payment services to the American...
Pix Instant Payments: Lessons Learned and Implications for the U.S
While Pix is a success story, there were many challenges in the beginning. Banks, payment institutions and solution providers supporting Pix had to adapt quickly. Below are four examples of lessons learned.
Fraud was a big issue especially in P2P transactions. Criminals were tricking consumers into sending them money and unlocked phones were being stolen. The solution was largely consumer education, but the Central Bank also imposed limits on how much could be sent via Pix by time of day, and they created a special refund mechanism so a consumer could claim fraud. They also introduced a mechanism to block suspicious transactions including messaging between banks to seize and return funds.
With over 700 participants, inevitably there were going to be bugs. And, some FIs sent money to other FIs by mistake or sent the wrong amount and there was no recourse. The Central Bank stepped in and created legislation that mandated that when a mistake is made, a bank can ask another bank for the money back and they have to give it back.
POS solution providers (e.g. NCR)
Were slow to integrate Pix which lead to merchant confusion and fraud. For merchants, they didn’t know how to confirm payment of a QR code when Pix launched because their POS systems weren’t integrated with Pix. Over time, POS providers integrated with Pix so merchants could confirm Pix transactions. Early on, fraudsters caught on to this and would generate a fake mobile receipt to trick merchants into making it look like they had paid. Over time, merchants learned to make sure their POS confirmed that the payment had been made.
The Central Bank of Brazil didn’t allow for interchange to be charged on Pix transactions. For large debit and credit issuers, this had a material impact on their revenues related to P2B transactions (e.g. in-store and ecommerce). Because Pix was mandated by the Central Bank of Brazil, the large banks had no choice but to offer Pix so the lack of interchange didn’t impact adoption. In the U.S. instant payments is being driven by the market, not by mandate. Enabling interchange in the U.S. may be a key to adoption by the big banks.