Friday Briefing: Brazil’s Central Bank Sees PIX’s Future in Crypto and the Metaverse

March 25, 2022

#TopStory 🔝

Brazil’s Central Bank Sees PIX’s Future in Crypto and the Metaverse

The Central Bank of Brazil (BCB) anticipates exponential growth of the PIX instant payments system over the next three to four years, including the development of digital currencies and the exploration of the metaverse.

“[PIX] can become obsolete very quickly if it’s not designed from the start to
add new features or brands,” BCB President Roberto Campos Neto said Wednesday at the BIS Innovation Summit.

PIX will be important for the development of crypto assets in Brazil, he added, highlighting the potential for generating programmable money and smart contracts.

Neto said he’s very interested in the metaverse and has studied it in detail. “If we look at the number of financial transactions that are happening in the metaverse, it’s much more exponential than what we’re seeing in crypto, for example,” he said.

The central bank played a key role in making PIX the success story it is today, including the creation of a strong brand with a memorable name. The platform’s convenience
and the fact that it’s free for individuals and very economical for companies caught the attention of the financial system and, more importantly, the customers who embraced it.

Currently, there are 114 million people registered with PIX, representing more than 70% of the population. And nine million companies, or 65% of the total, also use the system.

“I think we achieved the goal of being competitive and inclusive,” Neto said.

#Regulation 📜

Here’s a rundown of the week’s regulatory highlights, via our new service iupanaPro.​​​​​​​

Colombia draws up instant payment system

Colombia is preparing the regulatory groundwork for the roll out of a massive public system of instant transfers, following in the footsteps of PIX in Brazil and CoDi in Mexico, according to Felipe Lega, director of the Financial Regulation Unit. High interchange fees and the lack of interoperability between closed loop QR systems are important obstacles to overcome, Lega said.

Banks will notify blacklisted people in Mexico

Financial institutions must inform users when they have been added to a blacklist of individuals who are unable to carry out operations, as part of changes to Mexican banking law. Previously the onus was on the Financial Intelligence Unit to inform the individuals. Blacklisted users can request an FIU hearing within 10 business days of being notified in order to argue their case.

Peru opens up to more fintech competition

New regulatory changes in Peru mean financial service companies won’t need physical branches to operate, which could attract neobanks or other 100% digital businesses to the market. In addition, the changes allow for the creation of “credit companies,” a legal concept that could appeal to fintechs that want regulatory support for lending.

#Investments 💰

Jeeves becomes a unicorn, with Tencent’s support

Jeeves is the region’s latest unicorn. The payments and lending fintech achieved a market valuation of US$2.1 billion following a series C round that raised US$180 million, led by China’s Tencent. Jeeves, which focuses on the corporate sector, will use the proceeds to expand in Latin America, Canada and Europe.

Mercado Pago set to grow in Brazil

Argentine e-commerce giant Mercado Libre said it will invest US$3.4 billion in Brazil this year, 70% more than in 2021. A major element of the investment program will be the expansion of its fintech arm, Mercado Pago, which increased its payment volume by 52% last year to US$24.2 billion.

Vexi raises US$ 24m in debt and equity

Mexican neobank Vexi raised US$24 million in an equity and debt round. Magma Partners led the injection for equity and Accial Capital led the debt portion. Vexi provides payment and credit card processing services with features such as interest-free months, as well as insurance.

• In other investments, Colombian fintech Plurall raised US$11.5 million, of which debt accounted for US$10 million and equity the remainder. Meanwhile, the Peruvian paytech Rextie raised just over US$1.4 million.

#Internationalization  🌍

Ligo launches cash transfers from Peru to Venezuela

The Peruvian e-wallet said users can now make free international transfers to Venezuela, and more countries will be added to the list in the coming weeks. It follows the launch of a similar service for remittances between Mexico and the United States by Revolut, and between Guatemala and the United States by Meta.

Galileo expands to Colombia

Galileo, a subsidiary of U.S. personal finance firm SoFi Technologies, is opening offices in Colombia after expanding into Mexico in 2020. The company said it made Colombia its second Latin American destination, ahead of Argentina and Chile, due to its favorable climate for fintech development.

#People 🙋‍♀️🙋‍♂️

Mastercard appoints CEO in Mexico

Mauricio Schwartzmann was appointed the new CEO of Mastercard in Mexico, after almost two years overseeing the launch and development of RappiBank in Peru. “I do it very convinced that it is the right next step in my professional career,” he said on LinkedIn.

#4 questions with Maite Muniz

What is the most common type of digital financial fraud in LatAm?

Identity theft, once the user has already created their account. That’s why companies should not only use digital onboarding as a filter; it’s also necessary to focus on the accesses made by the client to detect anomalies.

What challenges does the region still face in achieving true financial inclusion?

We are relying on technology to achieve inclusion; however, it doesn’t reach everyone. The number of people who can download an app on their cell phone is small because they don’t have internet or need to prioritize other applications. The challenge is how to bring service
to people who don’t have good internet quality. Perhaps one option is to look for accessible channels like WhatsApp.

What steps can fintechs take to prevent fraud?

Carry out the validation of the clients’ face and ID. It’s necessary to have both even if it means the digital onboarding takes longer. Eliminate never-ending forms that are unnecessary and only complicate the process. Make sure you improve the user experience. Asking for more than one method of contact—not just a cell phone or an email—protects your user from any eventuality and you as a company.

And 3 tips to organize yourself at work…

• Make lists to sort your priorities.
• Start the day achieving a small goal that you have previously set yourself. My best days begin when I start by reading a book or training at the gym.
• Prioritize what’s most important to your team and not to you.

Dig deeper into the vital issue of cybersecurity at our special event “Fraud Prevention: How to Rob a Bank in 2022”, on April 6.

#iupanaExclusive 🔥

Fintechs are evolving their payment products to include other features—financial or otherwise—such as loans or accounting software. Their objective is to win over one of the most reticent customer groups: SMEs.

• 70% of LatAm’s SMEs are informal, which limits their access to traditional financial services but creates opportunities for fintechs.

• It’s essential to use data generated by payments in order to offer the customer a more attractive credit
  product.

• Serving SMEs requires understanding the sector and adapting in order to overcome the barrier of fear when they’re faced with digital options

Find out more about what firms such as Clip, Tribal, and Treinta are doing to cater to Latin American SMEs in this week’s exclusive.

Over and out