At the centre of a new US tariff threat against Brazil is a seemingly innocuous irritant: an instant payment system used by millions of people every day in Latin America’s largest economy.
Pix, as the government-run service is called, is virtually ubiquitous across the country’s continental territory, from remote rainforest to urban favelas.
Free for consumers and low-cost for businesses, the digital money transfer tool is credited with boosting financial inclusion in one of the world’s most unequal societies since being launched in late 2020.
It is integrated into the mobile apps of banks or fintechs, routing money directly across accounts without the need for debit or credit cards. The central bank says it has brought more than 70mn people into the financial system.
“Pix is great because you don’t have to carry cash, you can do everything just with your phone,” said Cícero Alves, a 79-year-old taxi driver in Rio de Janeiro.
Yet despite being a state-developed success — or perhaps because of it — Pix was among the main justifications for Washington’s proposed 25 per cent duty on many Brazilian imports last month.
Supporters of the leftwing government in Brasília suggest it is because the popular payments instrument challenges American card networks Visa and Mastercard, as well as other US payments and technology companies.
A US Trade Representative investigation last month into alleged unfair trade practices claimed Brazil gave preferential treatment to its “national champion” to the disadvantage of US payments providers, encouraging Pix’s use over competitors by capping fees. All financial institutions with more than half a million customers must offer the tool to their customers.
The report called policies around Pix “unfair and discriminatory” while alleging a conflict of interest in the central bank’s dual role as operator of the system and regulator.
Although no action was proposed against Pix itself, the criticism of a beloved national asset has provoked a political controversy in Brazil that is set to figure in upcoming elections.
President Luiz Inácio Lula da Silva accused his main challenger in the October contest, Senator Flávio Bolsonaro — son of jailed ex-leader Jair Bolsonaro — of inviting overseas interference.
“They want to hand over Pix to foreign interests. They won’t succeed. Pix is an achievement of Brazil, and we will not give it up,” Lula posted on social media.
The younger Bolsonaro, who visited Donald Trump in the Oval Office days before the USTR report, has denied the accusations and urged the Trump administration not to impose new tariffs before the election — arguing that it would benefit Lula politically.
Flávio Bolsonaro defended Pix in Washington last week, saying it has “directly benefited American companies, as the volume of transactions processed via cards issued by US networks continued to grow”.
Yet in a submission to the USTR he also proposed preventing Pix from linking with non-western cross-border settlement arrangements — an apparent nod to Trump administration concerns about potential moves to reduce dependence on the dollar for trade, as advocated by Lula.
As a July 15 deadline looms for the USTR to take action against Brazil, Lula is appealing to patriotism in an attempt to repeat the popularity boost he enjoyed after the investigation was first opened a year ago. It was accompanied by a now-overturned 50 per cent tariff on Brazil that unsuccessfully aimed to prevent the prosecution of the elder Bolsonaro, Trump’s ally, on coup charges.
Flávio Bolsonaro, meanwhile, is seeking to credit his father with Pix. While it came out during his administration, the project was launched by central bank technicians who had conceived the plan years earlier.
“Pix is impactful for Lula’s campaign because it’s a way to raise the banner of national sovereignty,” said Creomar de Souza, founder of consultancy Dharma Political Risk and Strategy. “From Flávio’s campaign’s point of view, there’s a real threat that his actions could be interpreted as a concession to US interests.”
The USTR report echoed some concerns in a submission by Washington-based lobby group the Information Technology Industry Council (ITI), whose members include major US technology and payments companies.
“You have to be cognisant of the fact that Pix is a substitute for debit [cards]. It is definitely a problem for the card networks over the long term,” said Dan Dolev, a financial sector analyst at Mizuho.
Mastercard declined interview requests, while Visa did not respond to enquiries.
Designed as an alternative to slower interbank transfers that usually charge consumers a fee, Pix has become Brazil’s most common form of electronic payment by volume.
It accounted for more than half of all transactions in the country in the second half of 2025, just over one-quarter by value, and according to the central bank is used by more than 170mn people — some 80 per cent of the population. The system handled R$3.48tn ($650bn) across 7.9bn transactions this May alone.
Mostly used on mobile phone, it requires an internet connection and bank or financial institution account. The payer either types in a recipient’s unique ID code and the amount or a merchant generates a QR code.
Fees that banks can charge merchants for Pix transactions averaged 0.22 per cent, according to a 2022 study published by the Bank for International Settlements, compared with just over 1 per cent for debit cards and 2.2 per cent for credit. (Micro-entrepreneurs do not pay.) Pix was also cheaper than credit card fees in the US, Canada and the EU, the paper found.
Brasília has rejected the USTR’s charges, arguing that Pix is open and non-discriminatory public infrastructure designed to improve payments efficiency and lower transaction costs. It said the tool allows companies to build services on top of Pix and that foreign companies had benefited, adding that Google Pay was the largest payments initiator within Pix and a Visa subsidiary had obtained authorisation to operate the tool.
However, an earlier decision by Brazil’s central bank may have also fuelled the US critiques. The monetary authority blocked WhatsApp’s payment platform a week after it went live in 2020 on competition and data privacy grounds, only allowing its relaunch following Pix’s rollout.
Today, Pix is the world’s second-largest real-time payments scheme by transaction volume, behind India’s United Payments Interface, according to ACI Worldwide.
The central bank has previously said it discussed the adoption of Pix with neighbouring countries. Colombia has an instant payments system inspired by it.
Brazil’s central bank declined interview requests, but said its “regulation focused on openness and fairness across all payment segments”.
Selling national team jerseys on Rio’s Copacabana beach before Brazil’s exit from the World Cup, 35-year-old street merchant Douglas de Souza sang the praises of the payments tool.
Despite voting for Bolsonaro in 2022, he was not impressed by the ex-president’s son, so this time will back the incumbent: “You don’t hear about President Lula or anyone else going to the US to sell out the country or badmouth it to Americans.”
