US launches investigation into Brazilian digital payment system

What’s new? The United States has launched a formal investigation into digital commerce in Brazil, focusing on the Pix instant payment system, which has quickly squeezed competitors out of the private sector. According to US Trade Representative Jamison Greer, the investigation is designed to determine whether Brazilian digital and trade policies are putting US companies at a disadvantage.

Press release from the Office of the Trade Representative

What else is known? According to Greer, the investigation will look at “tariff and non-tariff barriers” applied by Brazil. He added that the country gives preferential treatment to some trading partners while disadvantaging US exporters.

Another focus is Brazil’s pressure on US technology companies that have refused to censor political speech. In August 2024, for example, Brazil’s Supreme Court ordered the suspension of social network X across the country after Elon Musk refused to appoint a local legal representative.

The investigation marks another round of heightened tensions between the two countries. On July 7, Trump appealed on social media to Brazilian authorities to stop prosecuting former President Jair Bolsonaro, calling it a “witch hunt.”

Trump then threatened to investigate Brazilian President Luiz Inácio Lula da Silva in a letter, and the US is imposing 50% tariffs on Brazilian imports starting August 1.

Pix, launched in 2020 by the Central Bank of Brazil, is a state-owned instant payment system that allows users to send and receive money around the clock and with no/very low fees.

Unlike traditional payment systems, Pix allows users to completely bypass credit card networks by making direct transfers via mobile apps or QR codes.

With over 150 million users and 60 million businesses, Pix has quickly become the backbone of Brazil’s digital economy: it is used everywhere from paying for purchases at street vendors to paying utility bills, changing the way money circulates in the country.

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The US investigation seeks to examine whether Brazil favors its local payment system over established US alternatives such as Mastercard, Visa, and other fintech companies.

Pix allows individuals and businesses to bypass traditional financial avenues like SWIFT, PayPal, and US money transfer services like Western Union.

For Trump, the issue goes beyond Pix. As a member of BRICS, along with Russia, India, China, and South Africa, Brazil is engaged in a coordinated effort to reduce reliance on the dollar and Western financial infrastructure.

In 2024, the bloc’s countries introduced BRICSPay, a cross-border payments platform to bypass SWIFT and facilitate transactions in local currencies. At the recent BRICS summit in Rio de Janeiro, the creation of a joint reserve currency as an alternative to the dollar was discussed, which, according to media reports, drew the ire of the US president.