Visa and Mastercard are applying for payment licences in Brazil. Read that again.
These are the two companies that spent decades building their business on partnerships—relying on issuing banks to do the operational work whilst they
collected interchange fees. Now they are going direct. They are competing with the very institutions that made them billions.
This shift tells you everything about how instant payments are disrupting traditional banking alliances.
The PIX effect
The numbers are significant. In 2024 alone, Brazilians made
63.4 billion transactions worth $4.6 trillion
through PIX, the country’s instant payment system. More than 152 million people and 15 million businesses have chosen instant and free over slow and expensive.
PIX launched in late 2020. Five years later, it has fundamentally changed how payments work in Brazil. What most people outside Latin America miss is this:
PIX is not just a Brazilian story. It is a preview of what is coming everywhere.
The Central Bank of Brazil did not simply create another payment rail. They created an existential threat to the traditional payment networks. When you
can transfer money instantly, for free, 24/7, the value proposition of card networks becomes very difficult to justify. Why pay interchange fees? Why wait three days (or, in Brazil’s case, 30 days) for settlement? Why tolerate the complexity?
Increasingly, people choose not to.
When your partners become your competitors
The card networks’ move to obtain direct payment licences is not just about protecting revenue, though obviously that is part of it. It is about survival.
They have analysed the PIX data and understood that their traditional model of sitting between banks and merchants, taking a percentage on every transaction, simply does not work in an instant payment world.
So they are doing something remarkable: they are becoming the thing they used to partner with.
Consider what this means for banks. The companies that extended your reach into every corner of the market are now your direct competitors. The “partner”
that helped you issue cards to millions of customers is now trying to bypass you entirely.
We see this tension with our clients at Cumbuca. Banks that spent years building relationships with card networks are now working to understand how to
compete with them. Meanwhile, the card networks are discovering that being a regulated financial institution is considerably more complex than being a network.
The compliance challenge
Compliance is where many organisations will face serious problems.
Instant settlement sounds attractive—and it is—until you realise that every compliance gap you had when transactions took days to settle now appears in
milliseconds. There is no buffer. No time to identify suspicious transactions before the money has moved. No opportunity to flag unusual activity before it is complete.
Brazilian regulators have issued enforcement actions against providers who believed they could move quickly and address compliance later. They cannot.
Regulators are pushing strongly for consolidation around fully licensed, properly regulated infrastructure. If you do not prepare from the beginning, you will encounter problems.
My team discusses this constantly. You cannot add compliance to an instant payment system retroactively. It must be built in from the start. The operational
and risk frameworks that functioned adequately in a T+X settlement world are inadequate—and potentially dangerous—when money moves in real time.
What this means globally
If you are observing Brazil and thinking this is interesting but not relevant to your market, you are mistaken.
India has UPI. Europe has instant SEPA. The UK has Faster Payments. The US is implementing FedNow. Mexico has SPEI. Central banks are developing digital
currencies. Every major market is moving—or has already moved—towards instant payments.
Everywhere this happens, the same dynamics will emerge. Traditional alliances will break down. Card networks will either adapt or lose relevance. Banks
will discover that their historical advantages matter less when a fintech can offer instant, free transfers. Regulators will take decisive action against anyone who is not serious about compliance. India, where UPI has been live for longer than PIX, VIsa and
Mastercard’s business is now a fraction of what it was.
The organisations that are preparing for this are asking these difficult questions now:
-
If our partners become our competitors, what is our actual competitive advantage?
-
Can our compliance infrastructure handle instant settlement, or are we vulnerable to enforcement action?
-
What does our business model look like when interchange fees are no longer the primary revenue source?
These are not theoretical questions. For companies operating in Brazil, these are urgent, practical issues that require immediate attention.
The fundamental shift
PIX has not simply created a new payment rail. It has revealed how fragile the traditional banking partnership model actually was.
When moving money took days and cost money, everyone had a role. Banks provided the accounts and regulatory oversight. Card networks provided global reach
and technology. Processors provided the infrastructure. Everyone took their share, and the system functioned—albeit imperfectly. And customers paid for it all.
Instant payments have demonstrated that the system does not need most of this complexity. You don’t need five intermediaries and three days to transfer
money from one account to another. You need proper infrastructure and strong regulatory oversight. And it should be free for customers.
The organisations that will succeed in this environment are those that can move quickly whilst maintaining compliance, compete with former partners without
destroying existing relationships, and build products around real-time data and instant settlement rather than adding new features to outdated infrastructure.
It is challenging. However, for fintechs, smaller players, and those willing to rethink how financial services operate, the opportunity is substantial.
Brazil has demonstrated what the future looks like. The question is whether the rest of the world is paying attention.
