I Helped Build Pix. Brazil's Payment System Is a Public Good, Not a Trade Offense.

Brazi's Pix instant payments system enables real-time transfers 24/7 across all financial institutions at no cost to individuals and small businesses.

By Jeff Alvares

On July 15, the U.S. government initiated a trade investigation alleging that Brazil's central bank unfairly favors its Pix instant payment system over American companies, such as Mastercard and Visa. This action comes amid President Trump's broader threats to weaponize trade policy, including 50% tariffs, to compel Brazil to drop criminal charges against former President Jair Bolsonaro.

The complaint reflects a fundamental misunderstanding of central banks' proper role in payment infrastructure, as well as setting a dangerous precedent of subordinating sound economic policy to political pressure. Pix isn't unfair competition—it's a model for how public institutions can address market failures, promote genuine competition, and foster financial inclusion and innovation.

Launched in 2020, Pix enables real-time transfers 24/7 across all financial institutions at no cost to individuals and small businesses. Today, 160 million Brazilians, or 90% of adults, use the system. Within two years, Pix transaction volumes exceeded those of debit and credit cards combined. The Bank for International Settlements (BIS), International Monetary Fund, and World Bank have hailed it as transformative for financial infrastructure and inclusion.

Central banks worldwide operate essential financial infrastructure, from currency issuance to interbank settlement systems. Instant payment systems represent a natural evolution, extending central banks' coordinating role to retail transactions. They reduce friction and increase access, enabling private providers to compete more effectively by building on shared, public foundations. Seventy countries have implemented such systems, with the BIS encouraging central bank leadership, particularly where private markets fail.

Brazil's central bank didn't rush to intervene. For years, it encouraged private players to develop instant payments, similarly to how U.S. banks created Zelle. The private sector failed to act, not due to technological limitations, but because of perverse incentives. Payment providers had little reason to build universal systems that would cannibalize their profitable card fees and transfer charges. Incumbent banks and card networks benefited from fragmented, expensive payment rails.

When the Central Bank of Brazil finally acted, it coordinated rather than competed with market participants. It built infrastructure, established rules, and mandated participation by large payment providers while requiring free access for individuals and small businesses. Crucially, the central bank didn't provide payment services directly. It enabled banks and fintech companies to build competitive offerings on shared infrastructure. The result? Neobanks and digital challengers gained market share by delivering superior user experiences at lower costs.

Critics wrongly equate coordination with market distortion. Pix didn't eliminate private providers. It forced them to compete on merit. Consider WhatsApp Pay, backed by Mastercard and Visa, which launched simultaneously with Pix. Unlike the free, frictionless Pix system, WhatsApp Pay charged fees and relied on slower credit card infrastructure. Brazilian consumers chose accordingly, and WhatsApp Pay failed to gain traction. This isn't unfair competition—it's markets working as they should.

Brazil isn't alone. India's Unified Payments Interface (UPI), also developed with central bank leadership, processes 18 billion monthly transactions for 500 million users. Both systems demonstrate that central banks—as neutral, non-profit actors—can build payment infrastructure that reduces costs, expands access, and spurs innovation by solving coordination problems that profit-seeking entities cannot.

American policymakers should ask why their financial sector remains dominated by legacy networks that impose unnecessary burdens on consumers and businesses. Clients still mail checks. Credit card fees remain steep. Zelle usage is widespread, with 100 million individuals enrolled, but it is limited to participating banks. 

FedNow, the Federal Reserve's real-time payment platform, launched in 2023. However, adoption is voluntary, and uptake remains modest, with 1,400 banks and credit unions out of a total of 9,000. Pix succeeded in part because participation was mandatory, a policy choice that reflects the central bank's public mandate. FedNow's voluntary approach leaves critical infrastructure to the discretion of private actors whose interests may not align with broader policy goals.

The genuine concern isn't that Pix is too successful, but that it remains an exception. Cross-border payments remain slow and expensive. The G20 has called for reform, and the BIS has encouraged countries to interlink their fast payment systems. Connecting systems like Pix, UPI, and FedNow could revolutionize international commerce, but this requires collaboration, not confrontation.

This investigation sets a dangerous precedent that extends beyond economics. Using trade policy to pressure sovereign nations over domestic judicial matters threatens the rules-based international order that has underpinned decades of global prosperity. Central bank payment systems are essential infrastructure, like power grids or telecom networks, that enable private innovation. Rebranding them as a trade barrier could chill innovation globally and discourage governments from addressing financial friction through well-designed mechanisms.

Brazil's success with Pix proves that when central banks lead with innovation and public purpose, entire economies benefit. The United States should not penalize success. It should learn from it.

Jeff Alvares is senior legal counsel to the Central Bank of Brazil. He was formerly legal counsel to the International Monetary Fund and a member of the Financial Stability Board secretariat. He writes in a personal capacity.