In industry conversations surrounding instant payments, it won’t take long for the topic of Pix to be brought up – and with good reason, as the Central Bank of Brazil’s solution has emerged as one of the most successful alternative payment methods (APMs) of recent memory.
For sectors adjacent to financial services, like Brazil’s emerging betting sector, Pix presents a number of benefits. At the Payment Expert Summit this week, part of the wider SBC Summit Rio event, the value Pix presents was emphasised repeatedly by attendees.
Praise heaped on Pix
“There was a very happy coincidence with the creation of Pix … iGaming and Pix have grown together,” said Paulo Gerber, CEO of Gamersbank, a São Paulo paytech firm, speaking during a panel discussion.
“The relevance of Pix for this market has been amazing. The largest market participation is through Pix, almost 100%, and a huge benefit is the traceability of the transactions.”
Pix was launched just a few years ago in November 2020, but it is now used by around 80% of Brazilian adults, with over 150 million business and customer accounts as of December 2023, breaking a record of 400 million total transactions last year.
An instant payment method, or any other form of APM, taking over from credit and debit cards is unheard of in Europe, though not to say impossible or even unlikely. Pix has caught the attention of European countries – Italy signed a bilateral agreement with the Central Bank last year, while Spain and Portugal allow tourists visiting the respective countries to use Pix.
The biggest selling point of Pix for the average Brazilian consumer is likely its convenience and instantaneous process. This is just as true for the betting sector as any other, with Pix enabling rapid withdrawals from betting accounts – arguably the most important aspect of the customer journey in this sector.
“Brazil is very lucky to have Pix, not many countries are lucky enough to have this,” said Leonardo Chaves, Country Manager – Brazil at OKTO, an international payments technology firm.
“Brazil is a country with amazing potential, we can see this as the market is the main market for many operators. Pix as a payment method has helped us with this process, enabling us to have deposits and withdrawals in a very natural way. Everyone knows how to use Pix.”
From the discussions overheard and observed at the Payment Expert Summit, the consensus among both Brazil’s betting and payments firms is that Pix poses nothing but positives for the nascent gaming space.
A nationwide regulated betting market was only launched in Brazil last month. The legislative pipeline for this launch dated back to 2018, with the most significant moment being when President Lula da Silva announced his intention to launch a regulated market back in 2023, with legislation finally approved by Congress – after much debate – in 2024.
The regulations place a heavy onus on Pix – in fact, it is the only option. Bettors cannot pay with cash, credit cards or crypto, with the exclusion of the latter two somewhat controversial for some betting and payments stakeholders.
As this sector continues to develop and eventually reach maturity, stakeholders seem confident that the role Pix and the Central Bank play will help curb illegal gaming, money laundering and fraud amidst Brazil’s transition from a grey betting market to a white one.
Leonardo Baptista, CEO of gaming focused paytech firm Pay4Fun, asserted strongly at the Summit that a ‘hugely illegal market’ is unlikely now “thanks to our central bank and our payments system”.
He continued: “The central bank is a very competent regulator and they take everything seriously. We hope that all this function will bring more legal operators to the market.
“We have space for serious, legit operators who want to work seriously and satisfy their customers, and have good payment methods. The market can only grow with that here in Brazil.”
Always room for improvement
Amidst the hype and praise for Pix, stakeholders in Brazil’s new betting space recognise that the sector is far from perfect. This is hardly a criticism either, as even the most mature and well developed betting sectors require continuous improvement.
The UK is perhaps one of the best examples of this, with a two-and-a-half year-long review of betting regulations and legislation concluding in April 2023 – and proving an exhaustive process for operators, regulators, industry suppliers and campaigners alike.
In Brazil, the government and businesses have seized a chance to hit the ground running by learning from the lessons (and mistakes) made in established betting markets while integrating payments innovations like Pix, which as outlined above is a very unique success story in global banking.
Moving forward, stakeholders believe that the system can be further enhanced with the introduction of biometrics and better ID verification procedures to better mitigate fraud and money laundering, while Open Finance solutions could further streamline the payments process for customers.
“For those who are serious in this market, and are actually monitoring all their transactions and users, there is a cost and a legal liability that is very serious,” OKTO’s Chaves continues.
“We have to be really careful in this technological infrastructure, with all the processes with our relations with customers, to keep everything safe and secure. We also have some facilities for the user to pay, but at the same time we may generate difficulties in fraud.”
There may also be room for other payments and fintech innovations to be rolled into Pix itself, while some, like Pay4Fun’s Baptista, believe that gaming firms could be finding more innovative ways to use Pix.
“Pix as a tech tool gives us a series of solutions that we in the betting market could be using in a totally different way,” he says. “We have the tech to see where the money is coming from, who to, the social security number.”
Ultimately it is important for Brazil betting stakeholders, from the various local and overseas licensed betting firms to the multiple payments providers looking to serve the space, to not get ahead of itself.
As Ludiara Sousa, Head of Payments at Brazilian betting firm Blaze, put it at the Summit, the industry ‘needs to be patient’ as ‘the market has just started … and the operators, regulators and providers need to work together’.
Still though, some stakeholders will always be eager to see some form of change, and as Brazil has some of the highest rates of cryptocurrency ownership in the world, the prospect of crypto regulation and possible crypto gaming was another common talking point at this week’s event.
