Pix Evolution and Implementation

SUMMARY PRESENTATION IDEALIZATION EVOLUTION NUMBERS FUTURE the complexity of the payment industry coupled with its multitude of specific interests, the BCB, as a neutral institution, took the lead in the development of the instant payments and its respective technological infrastructure, leading to the group of payment schemes that we know today as Pix. The first stage for the development of instant payments in Brazil began with the creation of the Working Group - Instant Payments (GT-PI), with the aim of maintaining a broad dialogue with the market on the subject. The GT-PI, opened to the participation by any interested institution or individual, had more than 130 participants. Dialogue was conducted in an open and transparent manner, in the form of interactive public consultations and the publication of the corresponding suggestions on the BCB website. As a result of the work of the GT-PI, the fundamental requirements of Pix were defined, approved by the Board of Governors of the BCB and disclosed through Communiqué 32,927, of December 21st, 2018. The communiqué established the basic characteristics of the instant payments ecosystem, including governance for defining rules, forms of participation, centralized settlement infrastructure, connectivity services and provision of liquidity. It was also through this communiqué that the BCB officially positioned itself as the leading institution in the Pix development and implementation process, defining its role as the creator of the scheme and operator of the centralized platforms. Given the successful experience with the joint construction model adopted in the GT-PI, in March 2019 the Pix Forum was created, a permanent advisory committee that meets regularly to discuss aspects related to the definition of rules, standards, products, technical, messaging and security requirements, with the aim of subsidizing the BCB in the role of defining. the Pix rules. The Pix Forum is made up of four thematic working groups (GT) 10 in which representatives of Pix participants, associations representing financial institutions, payment institutions and end users of Pix, as well as any other interested institution operating in the retail payments market. This open and collaborative environment provides transparency to the decisions. taken by the BCB and representativeness to the various market agents and representatives of civil society, ensuring a broader vision in the definition of technical specifications and in the creation of new Pix functionalities. In addition to positioning itself as the agent responsible for defining the Pix's rules, the BCB also decided to be the developer, operator and manager of the technological infrastructure that supports Pix, made up by the central settlement platform, the Instant Payments System (SPI), and the Pix aliases centralized database, the Directory of Transactional Account Identifiers (DICT). In October 2019, the BCB began the development of Pix's technological infrastructure. After a public consultation process, on August 12, 2020, the Pix Regulation, as well as the supporting documents that complements it, were published through the BCB Resolution no. 1. On October 5, 2020, one year after the initiation of the systems' development, and before Pix going live, the registration of Pix aliases by end users began, reaching more than 25 million aliases registrations in the first days of availability. On November 3rd, 2020, the restricted operation began, when the Pix participating institutions made available to a small number of their customers the option of making a Pix transfer, in order to start the ecosystem's operation gradually, allowing the final adjustments in both the BCB and in the participating institutions' systems. Finally, on November 16, 2020, Pix went into full operation, placing Brazil on the list of countries with a working instant payments system and starting a major change in the context of retail payments in the country. Since November 2020, a Pix transaction can be carried out from a current account, savings account or prepaid payment account. Individuals, companies and government entities can make transfers or payments in a few seconds, First BCB policy on instant payments (SPB Surveillance Report 2013) 2014 2020 2016 at any time or day, using an application either on cellphones or via internet banking of their relationship institution. Therefore, the payer is included in the Pix ecosystem, who by, accessing his account provided by a financial institution or payment institution participating in Pix, initiates a transaction that is allowed to travel through the BCB infrastructure. The funds reach the receiving end through the institution holding the payer's account. There is also the special settlement agent, which exclusively provides settlement services to other Pix participants, who do not directly access the settlement infrastructure provided by the BCB (SPI), and the payment initiator service provider (PISP), which exclusively provides the transaction initiation service to the end user in an account held by another institution. Institutions that participate in Pix through the transactional account provider mode can access the BCB infrastructure (SPI and DICT) either directly or indirectly (through another participant that provides the service). INFOGRAPHIC 1 Pix development timeline May Establishment of the Working Group (WG) on Instant Payments International Benchmarking Forum for payment institutions and payment schemes related affairs - International Workshop 2018 February June Pix branding launch Establishment of the Instant Payment System (SPI) October Beginning of the technological platform's development provided by the BCB December Fundamental requirements to the Brazilian Instant Payments Ecosystem 2019 April-June Survey "The Brazilian and the payments means habits" March Establishment of the Pix Forum 2021+ 8 See: Working Group - Instant Payments (bcb.gov.br). 9 Established through Ordinance 102,166, of March 19, 2019, available at <https://www.in.gov.br/materia/-/asset_publisher/KujrwOTZC2Mb/ content/id/67765121/do2-2019-03-20-ordinance-n-102-166-of-19-of-mar-2019-67764964 >. 10 The working groups within the scope of Pix Forum are: Business WG, Standardization and Technical Requirements WG, PI Messages WG and Strategic Security Group (GE-SEG). August Publication of the Pix Regulation October Beginning of Pix 3/11/2020 16/11/2020 Pix restricted operation Go live aliases registration Evolving Agenda 7

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