Central Bank of Brazil tests settlement infrastructure for instant payments

The new milestone sees the testing of critical features of the platform, through the simulation of transfers by participating institutions

The Central Bank of Brazil has kicked off a new phase in the testing process for Pix, the upcoming national instant payments platform, with the simulation of transfers.

The tests of the technology underpinning the settlement infrastructure will see participating institutions testing their settlement flows, so the process where resources are transferred from the payer to the recipient, with fictitious data.

Transaction flows between the participants of the instant payment platform and scenarios of failure around the settlement capabilities of the platform are the focus of this testing stage. Such scenarios aim to establish whether transactions are completed correctly and if transactions where information has been deliberately entered wrongly return an error message.

For this testing stage, the participation of financial and payment institutions is voluntary. Pix is expected to go live in November 2020, enabling round-the-clock payments.

According to the Central Bank, this stage is testing the most critical functionalities of Pix's centralized settlement system, as well as the tech infrastructure that is required for the operation of the service.

The next step in the development of Pix, a process that has engaged the private sector organizations that will be using it, is to carry out mandatory tests for all participating institutions in June 2020.

The Central Bank of Brazil announced Pix in February. The idea is to provide an easier, cheaper and more inclusive alternative to the current transaction models, such as same-day and next-day transfers on weekdays as well as cheques.

At the time of launch, the Central Bank's president, Roberto Campos Neto, said the introduction of Pix is "one of the most important initiatives of the year" for the institution and forms part of a series of upcoming innovations this year through to 2021.

Instant payments made using QR Codes will be introduced as part of the upcoming changes. This is hoped to benefit millions of small businesses and individual entrepreneurs across Brazil, as it will eliminate the need for card terminals. Last month, the Central Bank launched its standard for QR Codes, to universalize cashless payments in Brazil, which will become mandatory in September 2020.

As smartphone adoption rises in Brazil along with more sophisticated payment services and the number of local fintech ventures increases, customers are demanding to pay for and receive their products and services fast, so instant payments will be a massive advancement for the country's payments ecosystem.

Currently, Brazilians cannot make financial transactions outside banking hours and make real-time payments on weekends, for example. Under the new model, transactions will be fulfilled in up to 20 seconds.