The Central Bank of Brazil (Bacen) announced in February the launch of the Instant Payment System - PIX (SPI), which will allow the transfer of funds in real time between people and/or companies starting in November. In this article, we review the main concepts of this new type of service, which promises to transform the dynamics of the financial system in Brazil.

Evolution of the system

The sending or receiving of funds and payment of products and services are essential to the proper functioning and economic development of a country. These activities in the financial system are directly related to the Brazilian Payment System (SPB), regulated by the National Monetary Council (CMN), Bacen, and the Brazilian Securities and Exchange Commission. The SPB is a set of rules, procedures, and institutions that encompasses the entities and systems related to the processing and settlement of fund transfer operations, foreign currency transactions, or financial assets and securities (the SPB includes the entities operating Financial Market Infrastructure - IMF and the payment arrangements and institutions).

The SPB we know today has undergone various regulatory and technological updates to meet the needs of the market and to shape the dynamics and speed of the economy. In 2002, in order to significantly reduce risks and keep the Brazilian financial system among the most modern in the world, Bacen developed the "new SPB." At the time, among other changes, the Electronic Transfer of Available Funds (TED) was introduced as an option to send funds from one bank to another.[2]

Years later, in 2013, the regulatory framework applicable to payment arrangements and payment institutions was established, through the enactment of Law No. 12,865/13, which set forth the principles and concepts applicable to payment arrangements, payment institutions, and payment accounts.

Now, with the SPI, Bacen aims not only to meet the objectives mentioned above, but also to foster financial inclusion and competitiveness in the Brazilian financial system and encourage the digitization of retail payments (one of the most efficient of the SFN pillars of the BC# Agenda).

Characteristics of the SPI

Instant payments are electronic funds transfers in which the transmission of the payment order and the availability of funds to the receiving user occur in real time.[3] The service will be available 24 hours per day, seven days per week, and every day of the year.

The SPI will be operated through infrastructure developed and offered by Bacen itself, the PIX platform, which will encompass all institutions interested in providing this service (payment institutions and banks, among others) and will be available to users start in November of 2020.

Considering these characteristics, Bacen issued Circular No. 3,985/20, which governs the methods and criteria for participation in the arrangement for instant payments and in the SPI, as well as the criteria for direct access to the Transactional Account Identifiers Directory (DICT), further detailed below.

Principal concepts

In addition to the concept of instant payment discussed above, Circular No. 3,985/20 established a series of basic concepts regarding the SPI’s regulations. Among them, the following stand out:

  • Instant payment arrangement: this is the new arrangement established to govern the provision of payment services related to instant payment transactions;
  • Instant payment account - IP account: this is the account to be maintained in Bacen by participants (banks and payment institutions) for purposes of settlement within the SPI;
  • Transactional account: this is the account held by an end user (customer) at a payment service provider (such as a bank or payment institution) and used to make or receive an instant payment. It may be a cash deposit account, a savings deposit account, or a prepaid payment account; and
  • Instant Payment System - SPI: this is the centralized infrastructure for the settlement of instant payments where transactions between participants with an IP account will occur.

Participation modalities - instant payments arrangement

According to the provisions of Circular No. 3,985/20, the arrangement of instantaneous payments allows for two methods of participation:

  • 1. payment service provider maintaining a transactional account: a bank or payment institution offering an end-user transactional account, including payment institutions not subject to authorization by Bacen; and
  • 2. government entity: an agency of the direct administration that participates in the arrangement of instant payments exclusively to make or receive payments per se.

Obligation to participate - instant payments arrangement

Participation in the instant payments arrangement is mandatory for financial institutions and payment institutions authorized to operate by Bacen with more than 500,000 active customer accounts, considering cash deposit, savings deposit, and prepaid payment accounts.

According to the explanatory memorandum of Circular No. 3,985/20, the mandatory participation of larger institutions that focus on and operate in retail (offering transactional accounts to their clients) was on purpose. In this manner, the risk of non-adherence by institutions relevant to this market and the creation of various closed payment arrangements is mitigated,[5] which would represent inefficiencies and unnecessary costs, contrary to the real purpose of Bacen's plan. With the adoption of this criterion, Bacen was able to obligatorily incorporate into the new system a set of institutions that aggregates more than 90% of the total number of active accounts in the methods already mentioned.

Types of participation – SPI

The SPI allows the following methods of participation:

  • 1. direct: is characterized by the direct connection of the participating institution to the SPI and the ownership of an IP account; and
  • 2. indirect:[6] the participating institution has neither a direct connection to the SPI nor an IP account, and its participation occurs through a direct participant of the SPI, responsible for registering the indirect participant in the system and acting as a settler in the SPI for instant payments related thereto.

The methods were established in accordance with item 5 of Communiqué No. 32,927, of December 21, 2018, which disclosed the fundamental requirements for the SPI ecosystem. According to this item, the ecosystem must have a flexible and open structure for participation in order to foster the market and the emergence of new services. For this reason, Bacen allowed participation in both a direct and indirect manner.[7]

Obligation of participation – SPI

Participation in the SPI is compulsory for participants in the instant payment arrangement, for the purposes of the settlement dealt with in Circular No. 3,985/20,[8] and optional for clearing houses and providers of clearing and settlement services, exclusively for the purposes of settlement of private transactions for the provision of liquidity carried out between participants in the SPI within the infrastructure.

It now remains to be seen how the new system will be implemented and how it will unfold, as well as the benefits and regulatory impacts of its use. Once again, Bacen demonstrates proactivity, encouragement of innovation, and interest in market growth and development. The institutions win, with the structuring of a competitive and profitable market, and the users, with the possibility of using a more agile, simple, and less costly system.

For more information on the SPI, access:


[2] The function was launched as an option to perform a transfer of under the DOC - Credit Document modality.

[3] When a transfer is performed, the funds transferred are deposited into the recipient user's account in real time (within a maximum of 10 seconds from the time of transfer).

[4] Subsection VI of Article 2 of Circular No 3,985/20.

[5] According to Bacen Circular No. 3,682/13, a closed payment arrangement is one in which the management of electronic money or, cumulatively, the management of an account, the issuance, and the accreditation of a payment instrument are carried out: (a) by only one payment institution or financial institution, the legal entity of which is the same as the institution of the arrangement; (b) by a payment institution or financial institution controlling the institution of the arrangement or controlled by it; or (c) by a payment institution or financial institution that has the same controller as the institution of the arrangement.

[6] The following are prohibited: (i) participation in the indirect method for commercial banks, multiple banks with a commercial portfolio, savings banks, and clearing and settlement houses and service providers; and (ii) participation in the direct method for payment institutions that do not have authorization to operate granted by Bacen.

[7]Vote 32/2020-BCB, of February 12, 2020 - Explanatory Memorandum of Circular No. 3,985/20.

[8] According to Circular No. 3,895/20, instant payment transactions involving different institutions participating in the arrangement must be settled through the SPI whenever they involve transfer between IP accounts of different direct participants in the SPI. Furthermore, if different participants in the arrangement use the settlement service of the same direct participant in the SPI, the settlement of instant payment transactions between these different participants must be performed in the systems of the direct participant itself, without using the SPI.