Despite this shift, a significant gap has persisted in the realm of recurring payments. For millions of Brazilian consumers, setting up automatic payments for essential services or subscriptions has largely been confined to traditional methods: credit cards or direct debits linked to bank accounts. This limitation meant that recurring payments through debit cards were not possible in Brazil, further constraining options for much of the populace.
This traditional system has left a substantial portion of the population underserved, as Ralf Germer, CEO at PagBrasil, tells PYMNTS.
Broadening Financial Inclusion
Roughly 60% of low-income Brazilians do not possess a credit card, effectively barring their access to recurring payment functionalities through this channel. This significant segment of the population has also found limited recourse through direct debit options, compounding the challenge of managing regular payments.
The current direct debit system, while theoretically an alternative, presents considerable logistical hurdles. It mandates that companies establish individual agreements with each bank, an arduous and fragmented process that severely restricts its widespread adoption.
This complexity means that only major utility companies typically manage to implement such systems, often failing to cover regional banks. “A utility provider in São Paulo would likely not have an agreement with a regional bank in southern Brazil, leaving customers of that bank unable to set up recurring bill payments,” he says.
That’s changing with Pix Automatico, launched Monday (June 16), which allows consumers to set up recurring payments tied to their banks or digital wallets — a paradigm shift, Germer states.
“Pix Automatico will be available to any user of Pix without any limitations,” he notes. This means it will not only include the population of these 60% of Brazilians who don’t have credit cards but also empower smaller and medium businesses that previously lacked access to a proper system for recurring payments.
PagBrasil is at the forefront of making this new functionality accessible, with Pix Automatico being rolled out to all of its domestic and cross-border merchants today. This immediate availability ensures that PagBrasil’s diverse merchant base, regardless of their establishment, can leverage this transformative payment method.
The company aims to streamline the process by handling Pix Automatico payments in Brazil, collecting the funds, and then transferring them in dollars or euros to destinations worldwide, in the case of international firms, Germer confirms, highlighting the global reach and seamless integration PagBrasil aims to provide.
While domestic merchants are expected to adopt it quickly, international merchants are already actively implementing it and are anticipated to go live within the third quarter of this year.
“While Pix Automatico is slightly more expensive than a standard Pix transaction, it remains significantly cheaper than credit cards,” notes Germer. This cost advantage can translate into substantial savings for businesses with high volumes of recurring payments.
Opening Up New Segments
Perhaps the most impactful benefit is the unparalleled access to the aforementioned 60% of Brazilians who lack credit cards. This opens up entirely new customer segments, particularly for digital services and gaming platforms, where younger audiences often have Pix accounts but no credit cards. The wider reach can directly translate into increased sales, as evidenced by anecdotal accounts of street vendors tripling their sales after accepting Pix.
A critical advantage for merchants is the absence of chargebacks with Pix Automatico. “Once a Pix payment is made, it’s paid; it’s not possible to charge back at all,” Germer emphasizes. This eliminates a significant source of financial risk and administrative burden associated with credit card payments, offering merchants greater security and predictability in their revenue streams.
Pix Automatico was “created for the digital world,” Germer tells PYMNTS, offering a superior user experience tailored for online transactions. Consumers authorize recurring payments within their mobile banking apps, with full transparency on details like payee, amount, frequency, duration and even a maximum charge for variable bills. This robust control and transparency for users reduces the likelihood of disputes and abandoned subscriptions due as users can easily view and cancel mandates up to one minute before the next charge.
Furthermore, Pix Automatico allows for a wide variety of parameters to be set for different types of recurring payments. For fixed amounts, the exact recurring amount can be specified. For variable payments, such as utility bills for water or electricity, where the amount changes each month, users can define a maximum amount that can be charged. This ensures that users are not surprised by unusually high debits due to potential merchant errors. The mandate is strictly tied to these defined criteria, meaning it cannot be used to charge a higher amount, be used by a different merchant, or change the frequency of charges.
With a nod to the technical complexities involved in implementing Pix Automatico, PagBrasil has developed solutions to ease this transition for merchants. “For merchants that have a recurring business model, jumping on this train is a must-do,” Germer asserts — an onboarding made easier with the company’s intelligent platform for managing recurring payments, where Pix Automatico will be integrated.
“Pix Automatico is the biggest thing being launched in Brazil,” he says, “after Pix itself — and we’re getting to a completely different level of possibilities, user experiences and merchant experiences.”
