Is Brazil's Pix Payment System an Unfair Trade Practice?
One of the issues in the Section 301 investigation of Brazil's trade practices relates to Pix, an instant payment platform created and managed by the Central Bank of Brazil. I don't know enough about the underlying policies to have strong opinions here, so in this post I'm mostly just going to set out the competing views. I did include a few big picture thoughts about sovereignty at the end, though, so if you want to skip past all the quotations of the views of each side, you can scroll down for that.
What is Pix?
The Central Bank of Brazil explains Pix as follows (using Google Translate): "Within the Brazilian instant payment (IP) ecosystem, Banco Central do Brasil (BCB) created Pix, the Brazilian IP scheme that enables its users — people, companies and governmental entities — to send or receive payment transfers in a few seconds at any time, including non-business days." In "The Political Economy of Brazil’s Pix Payment System," Jeff Alvares, senior counsel at the Central Bank of Brazil, provides more background as follows:
Brazil’s payments landscape before Pix launched in 2020 exemplified market frictions. A few major banks dominated both infrastructure and customer-facing applications. Wire transfers cost $1.50-3.00 USD and took hours or days to clear. Credit card fees reached 2.2% on average, compared to 1.7% in the U.S., 1.5% in Canada, and 0.3% in the European Union. Around 45 million Brazilians, about 29% of the population, remained unbanked and excluded from digital commerce. Existing players had little motivation to incur the fixed costs of infrastructure that could cannibalize their card fees and transfer charges. Incumbent banks and card networks benefited from fragmented, costly rails.
The Central Bank conceived Pix to overcome this structural inertia. It now operates the Instant Payment System (SPI) infrastructure to provide real-time settlement around the clock. Use of this rail is mandatory for banks and major PSPs. Pix itself, the payment scheme running atop the SPI, is also Central Bank-controlled, with mandatory participation, and zero pricing for services to individuals and small businesses. (In common parlance, Pix refers to both the payment scheme and the vertically-integrated payment system including SPI).
The cornerstone of Pix’s integrated design is a combination of legal and economic barriers to potential competing payment schemes.
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Pix’s fast, affordable, and near-universal model has achieved transformative results. It now reaches 177 million users (83% of population) and accounts for 51% of all payment methods, displacing payment cards and bank instruments alike (see chart). It processes seven billion monthly transactions worth $550 billion. For millions, it became the gateway to the digital economy.
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Pix delivers transformative social benefits, but it does so through foreclosure rather than through competition among payment schemes. This tradeoff raises profound questions for antitrust policy and international trade law. ...
See also this follow-up piece by Alvares: "What Brazil’s Pix Reveals About WTO Rules for the Platform Economy."
USTR investigates Pix
USTR's July 2025 notice of initiation of a Section 301 investigation of Brazilian trade practices raises a general concern about "government-developed electronic payment services" without mentioning Pix by name:
Brazil also appears to engage in a number of unfair practices with respect to electronic payment services, including but not limited to advantaging its government-developed electronic payment services.
In the public comments it received, USTR heard from groups on both sides of the issue, setting out the opposing views. Below are some excerpts.
Pix critics
Critics of Pix included the US Chamber of Commerce and the Information Technology Industry Council (ITI).
The US Chamber argued the following:
PIX has been successful in expanding financial inclusion and digital access in Brazil since its launch by the Central Bank of Brazil (BCB) in November 2020. American firms partner with PIX, laud its success, and consider the continued success of PIX to be a priority. However, we maintain concerns around the fact that BCB both regulates and competes with payment arrangements (PAs). While it is not uncommon for central banks to operate one or more payment systems and supervise the private sector, the BCB has failed to establish governance procedures that avoid conflicts of interest and crowding out the private sector.
The BCB is the sole systemic regulator of Brazil's financial sector, setting market entry conditions, operational standards, and pricing frameworks for all PAs. At the same time, it operates PIX, a Central Bank-run retail payment network, which is itself a PA and a direct competitor in the marketplace. As such, U.S. electronic payment system companies must compete against their own regulator. This contradicts international best practices and guidance from the OECD, World Bank, CPMI, BIS, and WTO, all of which call for a clear separation between oversight functions and commercial activities.
Further, PIX is not subject to regulation and supervision from a third-party regulator and overseer or price or budget controls in a way that would be materially equivalent to the kind of regulation and supervision that private players face. ...
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Brazil should commit to implementing effective measures that address the regulatory conflict of interest and anticompetitive practices described above. PIX should comply with the same regulatory, cybersecurity, and operational standards imposed on private-sector platforms and be subject to independent third-party regulation and supervision. Brazil should also ensure a clear separation between PIX's operational and regulatory/supervisory functions within the BCB to safeguard regulatory neutrality, mitigate conflicts of interest, and align with international best practices.
And ITI said:
Dual Role and Governance Concerns: The BCB is the sole systemic regulator of Brazil’s financial sector, setting market entry conditions, operational standards, and pricing frameworks for all PAs. At the same time, it operates PIX, a Central Bank-run retail payment network, which is itself a PA and a direct competitor in the marketplace. In practice, U.S. EPS are subject to a serious unlevel playing field as they must compete against their own regulator. This contradicts international best practices and guidance from multilaterals, which call for a clear separation between oversight functions and commercial activities. Furthermore, PIX is not subject to regulation and supervision from a third-party regulator and overseer, or price or budget controls, in a way that would be materially equivalent to the kind of regulation and supervision that private players are subject to.
Anti-Competitive Distortions: Private players are required to create ecosystems where participation is voluntary, whereas PIX receives certain benefits. Examples of anti-competitive distortions include:
• Access to competitive information: The BCB has access to confidential and sensitive information from its private competitors (including pricing, product development, and commercialization plans), and also manages the development and operation of PIX. Without effective governance safeguards, this structure enables the BCB to shape both market dynamics and regulatory standards in ways that advantage its own platform.
• Mandated bank investments in PIX improvements, new features, and products – and guidance that banks should prioritize PIX – without equivalent obligations for private platforms.
• Regulation dictating priority placement of the PIX icon within bank apps, ensuring prominent exposure and enhanced user experience.
• Mandatory network integration with PIX that channels retailer and consumer behavior toward the government platform, constraining growth opportunities for U.S. companies in Brazil’s payments ecosystem.
• Not equal standards applicable to PIX as competitor: Private-sector payment providers are expected to deliver top level security at all times. This means being under constant oversight from the Central Bank and investing heavily to keep systems safe and resilient. PAs are also subject to technical standards, tax collection requirements, and supervisory costs that do not apply to PIX.
• Unequal treatment of card networks to initiate transactions on PIX: U.S. card networks are not authorized to use their credentials to initiate payments via PIX. As a measure of good faith, the BCB should promptly expand the concept of payment initiation in order to permit all card networks and digital wallets to initiate payments on PIX, and to do so in a manner that would not require ongoing access to or retention of customer and transaction-related data. Such a measure would complement—not replace—existing PIX offerings and support broader adoption.
Pix defenders
On the other side, groups defending Pix were Public Citizen/Data Privacy Brasil Research and – not surprisingly! – the Brazilian government.
Public Citizen and Data Privacy Brasil Research said:
Pix is the result of a collaboration between the Central Bank, which regulates and operates it, and other private sector stakeholders, which began in 2018 with the establishment of a working group on instant payments. The private sector has been particularly involved since the design phase of Pix, and currently, there are over 900 payment and financial institutions participating in the system. The creation and continuous development of Pix is supported by the Pix Forum, created in 2019, which is composed of various market players with the goal of dialoguing with and supporting the Central Bank in defining the operating rules for instant payment ecosystems. Thus, key regulations around Pix have been developed through open and consultative mechanisms involving private banks, payment system operators, fintech companies, etc. There are therefore numerous mechanisms for private sector operators to liaise with and suggest improvements to the regulatory ecosystem around Pix.
As with other Digital Public Infrastructure (DPI) systems, Pix attempts to “open up” the payments ecosystem, thereby enabling greater competition and innovation in the fintech sector. A number of smaller companies and startups are said to be developing new services and applications around the Pix ecosystem, creating an ecosystem of diversified product offerings. As noted by an International Monetary Fund (IMF) study, the use of Pix has enabled greater competition in the financial sector as it has “led to the growth of several payment services institutions, which have established banking subsidiaries, increasing competition for deposits with big banks. The open sharing of transaction information on Pix users has helped to strengthen competition in the sales of banking products and services, including for better and cheaper payment services, among various institutions.”
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It is important to note that Pix is not a substitute for traditional digital payment mechanisms such as credit cards. Pix has not replaced credit services; instead, it has been widely used as a real-time payment tool. If anything, Pix has driven a move away from the use of cash, rather than traditional digital payment methods. Notably, despite the huge uptake in use of Pix, studies indicate that the use of credit card systems has also increased over the past 5 years. Data show that the credit card market expanded in Brazil (with an 11.6% increase in the number of transactions in credit in the first half of 2024 compared to 2023), reaching R$4.1 trillion in total transaction volume.
And the Brazilian government said:
In establishing itself as the entity responsible for defining Pix’s rules, the BCB—recognizing the need for neutrality—chose to develop Pix as a Digital Public Infrastructure. As such, it is not exclusionary by design. This open-access system is available to all eligible institutions/entities/persons as a means to encourage innovation and the development of new business models by market participants, thereby promoting financial inclusion. Foreign entities also have the opportunity to integrate it into their systems through regulated financial institutions. To this end, BCB also became the operator and manager of Pix’s technological infrastructure, consisting of the Instant Payment System (“SPI”)—the central settlement platform; and the Transactional Account Identifier Directory (“DICT”)—the centralized database of transactional accounts linked to Pix keys.
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The development of Pix, therefore, is at the forefront of a global trend to which the United States’ own Federal Reserve is actively contributing. The fact that the instant payment infrastructure provided by the BCB makes available to the Brazilian public an additional service, alongside other electronic payment options offered by different providers, is remarkably analogous to the development of FedNow in the United States and of similar infrastructure in other jurisdictions.
Brazil’s policies and measures do not restrict the operations or undermine the competitiveness of U.S. companies engaged in electronic payment services. Brazil does not apply differential treatment to foreign payment providers, nor does it impose licensing or operational barriers specifically on U.S. providers.
There is no prohibition on digital platforms—such as WhatsApp, Facebook, or Instagram—offering their own digital payment services. However, like any other domestic or foreign digital payment service providers, they must obtain authorization from the BCB; comply with the LGPD; and adhere to relevant, non-discriminatory regulatory requirements.
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To reiterate, there is no discrimination against U.S. digital payment service providers—whether in the form of additional or distinct requirements, or regulatory bias vis-à-vis domestic or third-country providers. All providers, regardless of origin, must meet the same criteria for the provision of digital payment services.
There are no specific restrictions, for example, preventing U.S. digital wallets from operating in Brazil, whether for consumer or merchant accounts. They are not required to use Pix and are free to process transactions through their own systems. They must, however, like all other digital wallets (domestic or foreign), integrate with BCB-authorized institutions and comply with Brazilian regulations. No additional or differential regulatory requirements are imposed on U.S. digital wallet providers compared to Brazilian or other foreign counterparts.
There is likewise no prohibition on private payment platforms such as the U.S.-based Zelle and Venmo operating in Brazil, provided they—like all other domestic or foreign private payment platforms—secure BCB authorization, establish a local commercial presence (or partnership), and comply with Brazilian regulations.
The evidence presented herein makes it abundantly clear that Pix does not discriminate against, and does not unfairly disadvantage, U.S. companies engaged in digital trade or electronic payment services. By incorporating millions of users in the market for digital payments—an achievement of financial inclusion that has been widely recognized internationally, including by U.S. private companies—Pix has leveraged the potential of the Brazilian market for all providers, including U.S.-based companies.
Questions from the U.S. government
Pix came up at the public hearing as the Section 301 Committee asked questions of the witnesses. Nicholas Voltaggio of the Department of the Treasury asked Neil Herrington of the US Chamber the following:
The first question is for Mr. Herrington. Your testimony summary and your written comments, as well as your testimony here today, address conflicts that arise from the Brazilian Central Bank's operation and regulation of the government run electronic payment system, or PIX.
Could you please expand on these concerns and how specifically they may affect U.S. firms?
Herrington replied:
Sure, I'll say – I appreciate the question. I'll say, first of all, I want to – I'll submit a written rebuttal response just to be very, very thorough.
But on the surface, I think, certainly, as I said in my testimony, we agree, and I think our members agree, that PIX has been beneficial for issues like financial inclusion and digital inclusion.
The real – the question becomes, what – when you work as both regulator and operator. And we believe that there's a lack of transparency and separation in the governance of – between the – being a regulator and being an operator in that sense.
And obviously, there are other Central Banks around the world that operate in that sphere, but they have, frankly, much more robust governance procedures. So again, it's the division between – we'd like to see the division between – ensure competitive playing field for private providers, ensuring that the peak system is divided between – that the responsibilities between operator and regulator are clearly defined and ensure transparency and fair competition.
Sarah Bonner of the U.S. Small Business Administration then asked Sean Murphy of ITI the following:
In your written comments, you state that private players in the digital payments landscape are required to create ecosystems where participation is voluntary.
Whereas, PIX receives benefits such as access to competitive information, mandated bank investments in PIX, and regulation dictating priority placement of the PIX icon.
Could you please elaborate on how, if at all, electronic payment service providers from the U.S. or elsewhere may be affected by these alleged benefits received by PIX?
Murphy replied:
... Let me begin by saying that Information Technology Industry Council and our members have no issue with government managed payment systems when they compete fairly with private sector payment systems.
And as my colleague from the U.S. Chamber said a moment ago, in the case of Brazil, this is not the situation.
The Central Bank of Brazil both regulates the financial sector, including many of the measures you just referred to, which are in our long form comments, but also operates a state championed entity that is a competitor to the private sector companies.
... on digital devices where you would normally access and conduct financial transactions, PIX is given prominent places.
For example, if you were – an equivalent would be if you were to walk into a bricks and mortar store and a competing product that is supported by the government has prime placement in a store and you have to then go search to find other alternatives that are operated by commercial service providers, it is itself, a de facto discrimination, and an impediment to fair access. ...
Some post-hearing comments are here: US Chamber; ITI; Brazil.
The USTR Determination
USTR took all this in, and in its determination came out on the side of the critics, offering the following conclusions on the issue:
Brazil has unfairly disadvantaged U.S. companies engaged in competing electronic payment services, including by policies that favor its national champion Pix. The Brazilian central bank established the instant payment system Pix in November 2020. Pix connects financial and payment institutions (‘‘participating institutions’’) with individuals, firms, and government entities to provide instant or scheduled payments, cash withdrawals, payment invoices, and short-term borrowing, among other services. The Brazilian central bank’s dual role as regulator and owner/ operator of Pix creates a conflict of interest, in the absence of adequate procedural safeguards. The bank has acted as a regulator to disadvantage U.S. electronic payment services providers and preference Pix. For example, the central bank mandates the use of Pix by financial institutions with more than 500,000 accounts and requires that Pix be displayed on participating institutions’ main application screen with no less prominence than any other payment or transfer functionality. In addition, the central bank encourages use of Pix over other services by mandating that participating institutions (including institutions that it requires to participate in Pix) offer Pix for free to individuals and by capping the fee those institutions may charge businesses for Pix transactions.
The acts, policies, and practices of Brazil related to its preferential treatment of Pix are unfair and discriminatory. It is unfair to require competitors to provide advantages to Pix, such as availability, visibility, and fee caps, and Brazil discriminates against U.S. electronic payment services suppliers by providing those advantages only to Brazil’s national champion. The acts, policies, and practices of Brazil related to its preferential treatment of Pix are a burden or restriction on U.S. commerce by imposing costs on U.S. services providers and by forcing U.S. providers to promote their Brazilian competitor, without compensation.
Some other views
In a recent article, The Economist says not so fast on USTR's conclusions:
The Trump administration also complains that Brazil’s central bank both operates Pix and regulates it. The arrangement does raise legitimate questions about giving so much control over a payments system and the financial data it generates to a single institution. But those are concerns about concentration of power, not about discrimination against foreign firms. Governments build, own and regulate essential infrastructure routinely. There is nothing inherently discriminatory about applying the same model to payments, points out Monica de Bolle of the Peterson Institute for International Economics, a think-tank in Washington.
The second assumption—that Pix has harmed American payment companies—is also weak. It rests on a misunderstanding over why Pix was created, says Daniel Santos Kosinski, a professor of economics at the State University of Rio de Janeiro. Before Pix, existing services, including those offered by foreign firms, charged fees for electronic payments that poor Brazilians could not afford. Pix was built to change that. The central bank estimates that at least 70m people have entered the formal financial system since its launch.
Far from cannibalising other electronic payment methods, Pix has expanded the market. It has done so at the expense of cash and cheques, the use of which has plummeted. The number of cash withdrawals made every quarter has fallen by 46% since Pix was introduced ...
That does not mean incumbents face no pressure. Pix has changed the economics of payments. Bernardo Guimarães of Getulio Vargas Foundation, a university in Rio de Janeiro, says this may eventually squeeze the profits of Visa and Mastercard—but through lower fees, not fewer transactions. Businesses in Brazil typically pay around 2% of credit-card sales to a payment processor. A Pix payment costs next to nothing. The result is greater pressure on all payment processors, big and small, to justify the fees they charge.
The Trump administration’s deeper concern may be that Pix becomes a model for the rest of Latin America, eroding American card networks’ profits and their influence across the region. But that, too, is misguided. Pix was the product of Brazil’s particular circumstances: a powerful and trusted central bank that could require big banks to join the system, and a huge domestic market in which millions of people still relied on cash. It also took years to design and test. Few if any countries in Latin America have the same conditions.
The Pix trade dispute and sovereignty
It's clear that USTR has a good deal of discretion under Section 301 to find that foreign acts, policies, and practices are unfair trade practices on the basis of their impact on U.S. economic interests, and my sense is this discretion is broad enough to allow USTR to have reached its Pix determination. But should it have done so? How hard should the U.S. push in areas that U.S. trading partners will consider sensitive ones that implicate sovereignty?
In the pre-Trump trading system, some U.S. critics of that system – including those who later worked on trade policy under Donald Trump – worried about its infringements on sovereignty. However, when Trump was in charge, it sometimes seemed like these critics were looking to defend U.S. sovereignty but not particularly interested in foreign sovereignty. In the case of Pix, we are dealing with a policy/program of a central bank, which I would think involves a high degree of domestic political sensitivity. If sovereignty is a concern for people, payment systems set up by a central bank seem like an area where this principle should play a role in the decision-making about whether an unfair trade practice exists.
I can see the argument that the way Pix has been set up has some degree of negative economic impact on U.S. companies such as Visa and Mastercard. But if negative economic impact is the standard, a wide range of what most people would consider to be non-discriminatory laws, regulations, and policies could be the subject of trade disputes. The further we go beyond non-discrimination as the core principle underlying the trading system, the more we encroach on sovereignty and the more trade conflict we are likely to see.
Of course, if you believe that as the largest economic power, you can push others on their sensitive domestic policies while avoiding anyone pushing on yours, this is not necessarily a problem for you. But if, on the other hand, you are looking for principles that can sustain a durable trading system, this may not be the right approach.