Pix contributes to inclusion, but makes inequalities explicit

In operation since November 2020, Pix already has robust numbers: 120 million registered users and a record 54.5 million transactions in one day. Despite its inclusive power, it sheds light on Brazil’s regional economic inequalities.

Of the more than 110 million registered individuals, almost 26 million are in the Northeast. In January of this year, the region was responsible for transactions between different financial institutions that moved around R$ 44.2 billion.

In the South, where 15.7 million users live, the total value of operations was higher, R$ 47.7 billion.

The South concentrated 17.26% of the financial volume, against around 16% in the Northeast, despite having almost half the number of transactions carried out. In previous months, the scenario was no different. This example mirrors the contrasting Brazilian reality.

According to data from the System of Regional Accounts – Brazil 2019, the latest released by the IBGE (Brazilian Institute of Geography and Statistics), the Northeast represents 14.2% of GDP (Gross Domestic Product), while the South reaches 17.2%. The North region makes up a share of 5.7%, the Center-West sums up 9.9%, in addition to the 53% of the Southeast.​

In addition to the Brazilian GDP, Luciano Nakabashi, professor at FEA-RP/USP and researcher at the Center for Research in Regional Economics (Ceper), also observes regional disparities in indicators that measure people’s level of well-being.

“We have a very clear distinction in several indicators of economic development when we compare the municipalities of the North and Northeast and of the other three Brazilian regions. The South, Southeast and Center-West have municipalities with higher income, with better income distribution, more schooling and better health indicators”, he says.

According to the 2020 Continuous PNAD (Continuous National Household Sample Survey), released by the IBGE in November last year, the average real monthly household income per capita in Brazil in 2020 was R$1,349.

The study showed that the North and Northeast regions had the lowest values ​​–R$896 and R$891, respectively–, and concentrated the highest proportions of households with beneficiaries of social programs.

“Today, Pix does not solve the issue of social and regional inequalities and disparities that we have, but it is one more tool that helps and brings inclusion”, says Rodrigoh Henriques, leader of financial innovations at Fenasbac (National Federation of Central bank).

According to a financial citizenship report, published by the Central Bank in March last year, 34.9% of CadÚnico’s adult population and 25.3% of Bolsa Família beneficiaries had at least one registered Pix key. Adherence to the system also took place among those who received emergency aid.

In just over a year, the tool also helped to popularize credit transfer operations, which were previously restricted to higher-income consumers, such as TED and DOC, due to the collection of fees.

In the second quarter of 2021, Pix was the third most used payment method in the country, accounting for 12.93% of the amount of transactions, followed by boleto (15.09%), credit card (19.58%) and debit card (21.44%).

But cash is still the preferred form of payment for Brazilians for purchases, even among those who see Pix as an efficient tool to receive values, showed a survey by Instituto Locomotiva released earlier this month.

“In the Northeast, where there is a very strong dynamic of self-employed trade linked to tourism, the average ticket generated by a person who takes a boat ride or sells a popsicle is a little lower. This also ends up influencing the average of regional values”, says Carlos Eduardo Brandt, deputy head of the BC’s Department of Competition and Financial Market Structure.

Despite its success, insufficient income and low education are obstacles for Pix to become even more effective for all strata of the Brazilian population. A survey carried out by Ipespe (Institute of Social, Political and Economic Research) for Febraban (Brazilian Federation of Banks) in November, pointed out that Pix is ​​already used by seven out of ten Brazilians, but the rate of adhesion to the system is 64% among people with income of up to two minimum wages (corresponding to R$ 2,424 in 2022).

This percentage drops to 53% among respondents who have up to elementary school.

“While this world of digital finance is very promising for the democratization of financial services, due to the digital divide, it may end up increasing inequality”, says Lauro Gonzalez, coordinator of Cemif (Center for Studies in Microfinance and Financial Inclusion), from FGV Eaesp.

Old cell phone and lack of mobile internet are obstacles for Pix

The digital divide involves infrastructure issues, connectivity problems, high-priced mobile data packages and obsolete cell phones, in addition to difficult handling. The BC report finds that, despite the growing use of smartphones for internet access, the use of cell phones to make payments declines as income drops.

Geographical differences are also reflected in Brazilian digital access. The Northeast is the region with the lowest proportion of households with internet access in 2019, according to PNAD Contínua. In the rural area of ​​the North region, only 38.4% of the houses had connectivity, for example.

In Brazil, almost half of internet users in the C, D and E classes have already stopped making any financial transaction due to lack of mobile internet, according to a survey commissioned by Idec (Brazilian Institute for Consumer Protection) to the Locomotiva Institute, carried out between July and August of 2021.

Gonzalez, from Cemif, also recalls that information about data leakage and other issues related to digital security can undermine the confidence of users with low education and income.

According to Brandt, the Central Bank adopts a series of efforts on the issue of financial citizenship, which encompasses inclusion in the broad sense (access, use and quality), as well as education, protection and participation.

“People need to be mature enough to transact digitally and be prepared not to fall for scams and phishing [técnica de crime cibernético que usa fraude para manipular pessoas e obter informações confidenciais]. We have a mechanism to return values, in case of scams or fraud, to mitigate this process”, he says.

The deputy head of the BC’s Department of Competition and Financial Market Structure also highlights that Pix’s operational simplicity tends to include people with little digital familiarity.

“We want Pix to be a means of payment capable of meeting the maximum possible use cases and the various specificities in their most varied dimensions”, he says.

Central Bank promises automatic Pix and offline Pix

After the launch of Pix Saque and Pix Troco, the BC promises to deliver Pix Automático this year, aiming to “democratize” the dynamics of automatic debit.

Another product under discussion, still without a release date, is Pix Offline (provisional name), to offer the possibility of payment even without an internet connection.

The expectation is that the whole range of innovations will bring new perspectives to the population. In the opinion of Brazilians, surveyed by the Carat Insights survey, commissioned by Fiserv for the Locomotiva Institute, Pix will become the most popular means of payment in the country within ten years.