PagBrasil, a technology company specialized in digital payments, has received authorization from the Central Bank of Brazil (BC) to operate as a payment institution (PI) in the modality of an electronic money issuer. The announcement was made on December 31, 2024, in the ‘Diário Oficial da União‘ (DOU), Brazil’s Federal Official Gazette, which serves a similar function to the Federal Register in the United States.
Until now, PagBrasil was classified as a sub-acquirer or PSP, which stands for payment service provider. In this article, you will understand what a payment institution is, the differences between PI and PSP, as well as between PIs and banks, and how the Central Bank’s authorization brings positive impacts to PagBrasil’s operations.
What is a payment institution (PI)?
A payment institution (PI) is a company authorized by the Central Bank to provide payment-related services. In other words, they are companies that facilitate money movement.
The services that can be offered by a PI include:
- Issuance of electronic money: This includes prepaid cards, digital wallets, and other electronic payment methods.
- Execution of payment orders: Transferring money from one account to another, such as an online purchase payment.
- Execution of payment services: This includes services like collection via boleto and payment authorization for cards.
Differences between PI and PSP
Before receiving the license to operate as a PI, PagBrasil acted as a PSP, which stands for payment service provider. In summary, a PSP is a company that facilitates financial transactions between buyers and sellers, acting as an intermediary between them and financial institutions.
Imagine buying a product from an online store. When finalizing your purchase, you select a payment method, such as a credit card or boleto. This is where the PSP comes in.
The PSP receives the information about your purchase and initiates the transaction authorization process. It checks if funds are available on your card or if the boleto has been paid and sends this information to the store and the financial institution.
Here’s a summary of the most important differences:
Payment Institution (PI):
Nature of Business: A payment institution (PI) offers specific ways for consumers to pay, such as digital wallets, prepaid cards, or direct debits and provides services directly to the end consumer.
Focus: Issuance of electronic currency and basic payment services.
Relationship with the End Consumer: May have direct contact with the end consumer, offering its own products and services.
Payment Service Provider (PSP):
Nature of Business: Provides payment services to third parties, such as businesses and online stores.
Focus: Integration of various payment methods and offering tools for payment management.
Relationship with the End Consumer: Generally, does not have direct contact with the end consumer, acting as an intermediary between the store and the customer.
Differences between PIs and banks
The main difference is that PIs cannot grant loans or financing. Their focus is solely on payment services. Banks, on the other hand, offer a broader range of financial services, such as investments, insurance, and credit.
What are the impacts for PagBrasil’s clients?
In practice, nothing changes for PagBrasil’s clients, since the services offered as a PSP will remain available.
What is expected is the creation of new products and the expansion of existing ones, which, with the license, can offer new functionalities or solutions.
Among the existing products that will be impacted are Internacional Pix, which allows Brazilians to pay with Pix abroad, and Pix Roaming, which enables foreigners to pay with Pix in Brazil.
The PI license will allow these products to be used for transactions above $10,000 and for cash withdrawals abroad – a relevant functionality for countries where the use of physical currency is still predominant, such as Mexico.
“The PI license is a testament to our robustness, now officially approved by the Central Bank. It opens significant doors for product creation and further strengthens PagBrasil’s credibility, built over 15 years of history. With this, we will continue to be even stronger in our commitment to democratizing access to financial services and meet the needs of an increasingly connected world,” said Alex Hoffmann, CEO and co-founder of the company.
PagBrasil: the complete solution for online payments
PagBrasil has been operating in the digital payments market for 15 years and was founded by Brazilian Alex Hoffmann and German Ralf Germer.
Always striving to offer the best payment experience to the market, the company was a pioneer in launching products like Boleto Flash® (still the only solution on the market to confirm payment within an hour), Internacional Pix (which enables Brazilians to pay with Pix abroad), and Pix Roaming (allowing foreigners to pay with Pix in Brazil). It is also the first and only Brazilian company authorized to process payments through Apple Pay for e-commerce and the first to launch 1-Click Pix.
In addition to innovations in payment methods, PagBrasil offers a range of other solutions, such as PagStream® and PagShield®.
PagStream®: An intelligent platform for managing recurring purchases.
PagShield®: A robust anti-fraud solution that minimizes chargebacks due to fraud and maximizes approval rates for credit card sales.
PagBrasil provides easy integrations for the most relevant platforms in the market, including Shopify, Salesforce Commerce Cloud, and VTEX.
Want to know how PagBrasil can boost your business in the digital space? Talk to our experts!
