Why did Pix do so well while CoDi struggled?
Mexican digital payment system digital cobroor CoDi, has existed for more than two years in the country.
Yet much of the population is unaware of it, and only a few depend on it for daily payments, according to data from the regulator.
CoDi was an ambitious initiative put forward by the regulator in 2019 to facilitate financial transactions and foster inclusion.
But, it got off to a slow start with some 7 million registered users in a country of 130 million people.
Additionally, only 840,088 accounts reported at least one transaction, according to data provided by Banco de Mexico.
Further south in Latin America, another regional power has followed a similar path. Yet, on the contrary, its adoption rates have been staggering, raising questions about the causes of such widespread success.
Launch of Banco Central do Brasil Picture in 2020, and in less than a year, it has been massively adopted by the population.
It has reached monthly transactions worth $140 billion instead of about $0.16 billion accrued in CoDi payments since its inception.
The numbers are overwhelming
At almost every metric, the numbers seem overwhelmingly tilted towards Pix. More than 500 transactions are processed through Pix every second. That’s about 30,000 per minute and over 40 million per day.
“Pix is a success,” said Paulo Oliveira Andreoli, Head of Omnifinance at Grupo FCamara Consulting. “It was quickly adopted by Brazilians because it is a very practical, easy-to-use, safe and free means of payment.
Both CoDi and Pix are fast retail payment systems that allow users to make real-time payments. They are inexpensive and have the particularity of being available 24 hours a day, every day of the year, via a network operated by the central banks of each country.
But there are also differences in the design of the system, the level of buy-in from financial players and the intrinsic preferences between two different societies.
First, there is the cash factor. While cash is king in Mexico and the unbanked represent a large part of the population, the use of electronic money was already widespread in Brazil before the arrival of the Pix. It is a country with a high penetration rate of credit and debit cards and a greater number of banked adults.
The structure makes the difference
The design of the structure also makes a difference.
According to Bank for International Settlements, a crucial distinction of Pix is its openness. BiS argues that while only certain registered financial institutions are allowed to operate CoDi, in the case of Pix, three different types of players are permitted, including payment companies as well as fintechs.
In practice, some 774 companies have signed up to offer Pix in Brazil, including banks, credit unions, payment fintechs and public institutions. In the case of CoDi, data from regulators shows that currently just three banks – BBVA, Banamex and Bancoppel – account for up to 90% of all accounts reported by CoDi.
For some, the support of financial actors in Brazil was a key success factor.
“The Brazilian banking sector, in general, is one of the most innovative and technological in the world,” said Henrique Marise, head of payments at Brazilian bank Pan. “It is already putting on the table many initiatives on how to exploit the PIX in a sustainable way, taking advantage of the opportunities it offers.”
For him, the overriding factor was the involvement of the Central Bank governing the whole operation. According to him, his role was essential in promoting Pix and ensuring a level playing field for participants.
“The experience will be very similar regardless of your bank or payment institution,” he said.
“Pix has had unprecedented adoption in Brazil, and this will facilitate digitization in the future,” said Enrique Ramos O’Reilly, director of Mexican company Temenos.
“In Mexico, Codi didn’t have as much support and airplay, which led to much more limited success.”
As of March 2022, over 113.7 million individuals and some 8.5 million businesses have registered to use Pix.
Peer to peer continues to be the main source of transactions, contributing 72% of all transactions. Nearly two-thirds of Pix users are under 40.
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