Benefits for Bilateral Transactions and Trade
The integration between Pix and UPI has the potential to revolutionize trade and personal transactions between Brazil and India. Currently, the process of sending money between countries involves several steps, unfavorable exchange rates, and often mandatory conversion to the dollar, which increases costs and delays operations.
* Cost Reduction and Agility: By eliminating the intermediation of key currencies like the dollar, the new payment network can significantly reduce the costs and time of transactions. This benefits both large exporting and importing companies as well as small businesses and individuals who need to send money to family or friends.
* Strengthening Local Currencies: The possibility of making direct payments in real and rupee (the Indian currency) strengthens the currencies of both countries and reduces dependence on a global financial system centered on the dollar.
* Boost to Trade: The ease and cost savings in transactions can boost bilateral trade, making the exchange of products and services more attractive for both sides.
Impact on the "De-dollarization" Agenda
The movement to integrate the payment systems of Brazil and India aligns with a "de-dollarization" agenda that has gained traction in international forums, such as BRICS. The initiative to create an alternative payment system to the dollar is a way to seek greater financial autonomy and reduce vulnerability to economic and political sanctions from other nations. The collaboration between two of the largest instant payment systems in the world — Pix and UPI — serves as a practical example of how technology can be used to challenge the established financial order.
Brazil and India: Giants of Digital Payments
Both Brazil and India are global leaders in instant payments. Pix has established itself as one of the most widely used payment methods in Brazil, processing billions of transactions annually. Similarly, India's UPI is a massive success, processing billions of transactions per month and serving as a model of financial inclusion and large-scale digitization. The union of these two tech giants creates a powerful synergy, combining Brazil's regulatory innovation expertise with the massive scale and technical robustness of the Indian system.
Challenges and Next Steps
Despite the great potential, the implementation of an integrated payment network is not without challenges. It will be necessary to harmonize the regulations of both countries and establish an exchange model that is transparent and fair. Issues such as security, governance, and accountability for the operation of the joint system will also need to be defined. The project, which may initially be launched on a pilot basis for smaller transactions, symbolizes an important step for economic and technological cooperation between two emerging nations, with the potential to inspire similar movements in other parts of the world.
