Inspired By Brazil’s Pix, Federal Reserve Reportedly Plans Similar Payments Model

US central bank plans to launch ‘FedNow’ in 2023, an instant payments model similar to Brazil’s Pix

The US central bank plans to launch ‘FedNow’ in 2023, an instant payments model similar to Brazil’s Pix
August 30, 2022 | 04:02 PM

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Bloomberg Línea — The Federal Reserve is expected to launch an instant payments system throughout the US in 2023, according to the Wall Street Journal, in a model that seeks to modernize the payments infrastructure in real-time.

There are already private instant transfer initiatives such as Zelle, Venmo and PayPal, but, like Pix, developed and operated by the Banco Central do Brasil, FedNow - the name of the future solution - is set to allow the payment of bills and transactions 24 hours a day, seven days a week.

According to the Wall Street Journal, FedNow will have lower costs and greater efficiency than private versions, as well as reducing the vulnerability of the financial system.

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The system was approved by the Fed in 2019. The Brazilian central bank launched Pix in November 2020 and it has seen rapid adoption by Brazilians. By July 31, 2022, Brazil had more than 478 million keys registered. The keys are identifiers for each user, and each user can have up to three keys.

In less than two years, Pix has become the main means of payment and transfer among the Brazilian population, surpassing debit and credit cards and transaction tools such as TED and DOC, which have fallen into disuse by the population. Two of its main advantages are the absence of fees in transactions between individuals and the 24/7 operation.

With the success of the Brazilian financial digitization model, central banks in other countries have been inspired by Pix.

At a Brazilian Federation of Banks (Febraban) event in São Paulo earlier this month, the president of Brazil’s central bank, Roberto Campos Neto, said he would meet with the president of Colombia’s central bank, Leonardo Villar, so that the Andean country can understand how it works and “copy” the Brazilian instant payments model.