Pix Evolution and Implementation

FUTURE SUMMARY PRESENTATION IDEALIZATION EVOLUTION NUMBERS 4.1.1 Automatic Pix Pix will allow recurring payments to be made automatically, by the payer's previous authorization, without the need for authentications on each transaction. This functionality, known as Automatic Pix, will facilitate to make recurring payments, eliminating the need for scheduling and/or making payments for each transaction individually and, thus, minimizing the risk that the payment is not processed due to the payer's forgetfulness or neglection, thus incurring in additional costs such as fines and interests. It will be a very convenient payment method for users, reducing friction. For payees holding accounts in any Pix participant, the main benefit will be to allow the placement of recurring payments to be settled automatically, eliminating the need to open additional accounts and establish bilateral agreements with each of these institutions. The Automatic Pix will be developed in a very flexible manner, to meet the multiplicity of businesses with different needs and to provide opportunities for multiple agents to provide the solution to merchants, hence stimulating competition among participants. This is expected to allow reaching a larger share of payers and payees in various market segments. Given the greater number of firms capable of providing the solution to merchants, it is expected that the cost will also be lower than the one currently observed in the provision. of similar services. Furthermore, thestandardizationofrules, operational procedures, informational and financial flows will bring more efficiency to the process, simplifying both the operationalization and the control of the payment collection process, in addition to reducing costs for payees. We believe that the product will be used by public service concessionaires and by companies that provide products or services that require recurring payments, such as educational institutions, gyms, subscription clubs (online and offline), streaming services, health insurances, overall insurances, condominium administrators, clubs, news portals, credit operations, among others. Despite the specifications and development of this new product being expected to take place throughout 2023, it is estimated that the launch will take place in 2024. 4.1.2 Secondary channel for non-priority transactions From the point of view of Pix's technological infrastructure, a specific channel is under development for processing non-priority payments, the secondary message transmission channel, which will start to be operated in October 2023. With the possibility of scheduling a Pix, the paying institution retains payment orders on its systems until the due date. Sending these transactions, via the message system, to the BCB can lead to the accumulation of large batches of payments simultaneously and to the system overhead. In order to rationalize the processing of payments where the instantaneous availability of funds in the payee's account is not essential, as in the case of scheduled payments, and also avoiding concurrence with payments that, in fact, need to be settled in a few seconds, this secondary channel will be created for non-priority transactions. 4.1.3 Security mechanisms As previously mentioned, the improvement agenda related to the security of Pix is a continuous and a permanent work of the BCB and involves multiple external agents. For 2023, we highlight the planned improvements regarding security information related to the Pix aliases, which are stored in the BCB and shared with all participants. New specifications will be created to enable institutions to improve records related to fraudulent transactions. Additionally, the information made available when consulting users aliases for security purposes will be reformulated, bringing more relevant information and covering a longer period. Such improvements aim to provide better subsidies for institutions to help prevent fraud. 4.2 Future vision 4.2.1 Pix does not stop here Pix was developed, from its inception, with the purpose of meeting the most varied use cases, involving several diverse economic agents in Brazil, and providing a multipurpose means of payment, with potential for universal use. With Pix, the BCB is able to actively intervene in the achievement of multiple public objectives, stimulating a competitive environment, network effects, technical cooperation among market players and economies of scale. Innovative at its core, Pix has yet to reach its full potential. Although its versatility is recognized in relation to other payment instruments available in Brazil, there are still some challenges for its full use and availability for all payment needs. Even Pix being already consolidated by the population as a transfer tool between accounts, and its infrastructure allowing for several other innovations, some obstacles still need to be overcome. Some of these barriers are related to the usage habits of payers who are used to choosing other payment instruments in their daily transactions, mainly for paying bills and making purchases. Changing the habit of using a payment instrument involves time to absorb and understand how to use it and the benefits provided by the new instrument, as is the case with Pix. This requires educational actions by the BCB and the participants, development of new Pix use dynamics and the correction of inefficient incentives for its use. For payees, mainly merchants and government entities, there is still the challenge of efficiently generating batch payments and adapting the internal systems of payment issuers to automate processes. Pix makes it easy to integrate systems, but the process requires technological development by commercial automation and business management solution companies (such as ERPs and POS systems). Another issues are related to physical and electronic payments at points of sale which involve the need for technological developments by commercial automation software companies and integration and signaling actions by merchants, which also demand time for adaptation. Once these challenges are overcome, the BCB hopes that individuals and, above all, merchants will be able to use the structure and technology offered by Pix in a more creative way, without the need to adapt its use to pre-existing mechanisms, often related to other functionalities or other forms of payment. Pix includes innovative tools and, as such, must be disruptive in relation to what already exists, enabling, for example, new ways to make payments for purchasing purposes, such as self-services stations that do not need to queue at single points, among others. In short, the BCB's present and future actions will be guided by the objective of allowing payers and payees to have the option of choosing Pix for any type of payments, regardless of value and use case. Among the future possibilities for the evolution of Pix, there are several products and features that will make it even easier to use Pix in bill payments and purchase situations, which are typically transactions between individuals and companies. The BCB strives for Pix to be an instrument for promoting competition, financial inclusion and transparency in the provision of payment services in order to Pix be able to contribute to a more efficient retail payments market. 4.2.2 The (r)evolution continues The products and functionalities to be developed in the context of the development agenda for the coming years should boost Pix more intensely, as a universal payment instrument. The goal is for making Pix effectively address situations and use cases not yet covered and also to improve the payment experience for users, meeting the demands of society. Among the possibilities for future developments is the use of other forms of initiation that allow the payer to carry out Pix transactions without internet connectivity, which has the potential to expand access and provide more convenience to users, stimulating new usage dynamics and the replacement of less efficient means of payment. The arrival of 5G technology in Brazil brings even more opportunities for the development of quality processes and solutions for the retail payment market. The ability to process transactions in a shorter period will allow for the potential use of digital instruments, such as 28