Nubank Praises Pix’s Boom, Predicts it Will Replace Debit and Credit Cards in Brazil

Bloomberg Línea — Brazil’s fintech Nubank (NU) says it sees Central Bank-powered real-time payments system Pix taking over debit and credit cards in Brazil in the long-term.

Asked by an analyst during the company’s second-quarter shareholders meeting, Nubank said it sees an addressable market for payments in Brazil, expecting to see young and older users with a smartphone using Brazil’s instant payment system.

Nubank’s CEO David Vélez said credit cards are like Netflix’s original business --sending physical DVDs to people’s homes-- and Pix is the new digital future. “We started a strategy to use payment rails from Pix to start diversifying from credit cards,” said Vélez.

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In the second quarter, Nubank also announced the possibility of providing credit on top of Pix’s infrastructure, with more alternatives to credit cards.

In a statement by Brazil’s Central bank in March last year, the monetary authority of Brazil disclosed that Pix surpassed payments through DOC and TED types of transferences and boleto (a form of a cash-based banking slip in Brazil).

Nubank believes the potential cannibalization of debit cards will come sooner than credit ones and it will take “a number of years to get there”, according to Vélez. “Specifically credit cards, as they have the usability of cross-border payments and installment payments,” he said. Pix, nevertheless, is still subject to Brazil’s frontiers, yet. Brazil’s Central Bank president Roberto Campos Neto recently said he sees room for Pix expansion in Latin America, given Brazil’s banks have operations in LatAm.

“We are happy to cannibalize ourselves to scale to where it is going,” he said.

-- Updated article to correct Vélez’s sentence that had been attributed to Nubank’s CFO, Guilherme Lago

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