Limit on the use of Pix is ​​a public safety cost paid by society, says BC director


Responsible for implementing Pix, the director of Financial System Organization and Central Bank Resolution, João Manoel Pinho de Mello, said in an interview with sheet which assesses the first year of the Brazilian instant payments system as positive.

For him, the design of the new tool allowed a quick adhesion by the population.

On the controversies involving security, he guarantees that the system is secure, but attributes the increase in fraud, scams and other crimes involving Pix to the reopening of the economy.

However, Pinho de Mello emphasizes that, despite being a public safety problem, it is also the regulator’s responsibility to make rules that reduce this risk.

Recently, the BC announced new rules to try to contain the action of criminals, such as the limit of R$1,000 per night. “It is society once again paying the cost of public safety”, says the director.

According to him, the monetary authority tried for years to make the financial system itself develop an instant payment solution, but decided to take the initiative to implement the model.

“We have a very successful credit and debit card industry, allocating time to do another solution requires a lot of coordination. If a private solution appeared, it would be great, but there were difficulties in coordination, so the BC made the decision to do so centralized,” he says.

Pinho de Mello also states that the Covid-19 pandemic played an important role in the digitalization of means of payment and, as a consequence, in the rapid adhesion of the population to Pix.

Pix had an intense first year, with very quick adoption and security controversies. What is your assessment of this period? The balance sheet is far more positive than anyone could have anticipated.

There was a lot of certainty that the adhesion would be strong and a lot of confidence in the quality of the design and in the attractiveness of the payment method, in terms of its instantaneity, availability and low cost.

Before the launch, did BC predict that the tool would have this reach? I didn’t have a forecast, but if you take the first few years in other countries that have implemented instant payment systems, there’s a lot of difference in boarding speed.

The fastest was Chile, which in the first year had nine transactions per inhabitant. If we reached Chile, it would be, by any measure, an absolute success. Today Pix has 30 [transações por habitante].

We had the expectation that the shipment would be deep, because there is a large fraction of the population for which this means of payment was lacking.

What can be attributed to Pix’s meteoric growth in the first year? There are several factors. First and foremost, the design was very well done because it was carried out in collaboration with market actors, be they institutions that provide payment services [como bancos, cooperativas e fintechs], are technology service providers.

We always listen to those who are going to provide the service to end customers, but with a strong command from the BC, which is the one who decides.

This combination was very unique. It was something that we built into Pix’s governance that will remain for the next countries that implement instant payments.

Why did BC decide to take the initiative to create the instant payments system? In other countries, the market itself started the movement. For four or five years the BC had been trying to encourage and induce a private solution. It would have to be one of those that everyone can participate in and that would be interoperable. The private world has these solutions, but there was a problem of coordination.

We have a very successful credit and debit card industry. Allocating time to do another solution takes a lot of coordination. If a private solution appeared, it would be great, but there were these difficulties and that’s why the BC took the decision to do it centrally.

It is important to emphasize that we do not offer the service directly, it is the institutions.

The BC has three roles: the financial settlement structure, which is the pipeline through which the money passes; the information structure, which is the database that identifies users as Pix recipients; and regulation, which are the rules of the game.

The pandemic accelerated the digitization of payments, did this contribute to Pix’s quick take-up in the first year? It’s undeniable. There was a movement of digitization of means of payment and of life in general. The way people relate to commerce has changed and was already changing, it was a trend, but with the pandemic it exploded.

Not only Pix, but credit and debit cards grew because of the new needs that the health crisis imposed. It will be hard to say how much [a pandemia] contributed quantitatively.

So did the pandemic accelerate the need to create an instant payment method? From the BC’s point of view, the pandemic did not change the schedule, which was already established before the health crisis. If it made a difference, it would be to delay it, because other urgent agendas entered and occupied the board.

Despite this, we continue with what had been established back in 2019, with restricted opening on November 1st and full opening on November 16th.

Why was adherence among individuals faster than among companies? We expected this, because the individual, in a sense, doesn’t need to do anything, they just need to know that there is [o meio de pagamento] and get acquainted.

A business establishment needs to adapt. A neighborhood restaurant, for example, has a system set up to receive cash and credit, debit and food stamps cards. The machine is connected to the restaurant’s system, the confirmation [do pagamento] is received on time.

Pix doesn’t come with this automatically, it comes with all the infrastructure for someone to provide the service.

More and more of these establishments are starting to embark on systems that do this automatically, but it costs them. It’s an investment.

Recently there was the first case of data leakage, at Banese, with 395,000 keys exposed. Are there chances of it happening in other institutions? Has BC improved monitoring? Anyone who says there is no chance of cyberattack is either unrealistically optimistic or not entirely honest.

Any data leakage can cause harm to the user and has to be taken very seriously.

The main lesson not only for BC and Banese, but for any company in this digitization movement, is to be totally transparent and see what the potential new vulnerabilities are.

We are always studying improvements.

Pix ended up facilitating the action of scammers and criminals, who are now able to obtain the money instantly and spread it among other accounts quickly. Were these security issues underestimated by the BC? Pix was built with co-participatory governance, in which one of the country’s leading experts in payment security took part. There were dialogues with police authorities and it was anticipated that there might be something in relation to instantaneity.

The system was built to be super-safe. But we had the reopening of the economy with another payment method structure, with people using digital means much more.

All these interventions [novas regras do BC para aumentar a segurança] they decrease the usability of the means of payment. Back there, BC limited the withdrawal at the ATM on weekends to R$500.

This is an inconvenience for people, done with a balance between cost and benefit. We are going to impose an inconvenience on society, which is basically just another way of measuring the cost of public safety. But I have the benefit of discouraging a type of crime and protecting the citizen.

These cases happened not because of Pix, but because of the return of social mobility in the context of the much greater use of digital means of payments.

It is important to point out that the interventions that were made [pelo BC] they were not only on Pix, but on digital payment methods, they are also valid for TED, for social network transfer arrangements and for debit card transactions.

Did the BC predict an increase in scams and other crimes with Pix? It’s hard to predict all the possible reactions not only from crooks, but from users of payment methods. But we did have an idea, so much so that we anticipated the anti-fraud and return marking mechanisms.

To prevent crimes, shouldn’t these mechanisms have been implemented at the beginning of Pix operations? Almost all development is costly for the financial system and this will ultimately be paid by users, there is no way out.

That set of features was there, the need and the speed was adjusted over time. In fact, the bounce mechanism is just one more way to make Pix more secure than other means.

Is BC studying other security measures? BC is always attentive and monitoring. We put in a pretty broad set of measures six weeks ago, so you need to track and monitor public security movements.

The rules were put in because we believe they are sufficient and effective.

The assessment was made that imposing a limit of R$1,000 for transactions with Pix between 8:00 pm and 6:00 am was worth it because you would save from a public safety point of view, because most kidnappings take place at that time.

But in some cases it limits usage. It is a limiter, it really limits. It is society once again paying the cost of public safety.

X-ray | João Manoel Pinho de Mello, 48

Director of Financial System Organization and Central Bank Resolution, he holds a bachelor’s degree in public administration from FGV, a master’s degree in economics from PUC (Pontifical Catholic University) of Rio de Janeiro and a Ph.D. in economics from Stanford University (USA). Before taking up the position at the monetary authority, he was secretary for Economic Policy and, before that, for Productivity and Promotion of Competition at the Ministry of Finance. He is also a professor at Insper


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