#FinOpen: The challenges of Direct Debit and the arrival of Pix Automatic
W FINTECHS NEWSLETTER #140
👀 Portuguese Version 👉 here
👉 W Fintechs is a newsletter focused on financial innovation. Every Monday, at 8:21 a.m. (BrasÃlia time), you will receive an in-depth analysis in your email.
Welcome to the edition of the Finance is Open series.
Every other Wednesday, in addition to the traditional Monday editions, I will cover key topics and the latest updates on what's happening in Open Finance, both in Brazil and around the world.
Finance is Open is sponsored by
Iniciador is the complete infrastructure platform specialized in Regulated Open Finance, enabling Payment Initiation and Data Access.
The solution removes technology and compliance concerns, allowing clients — with their own regulatory license or using Iniciador’s — to focus on new products and business growth.
Since Pix was launched in 2020, it became clear that it wasn’t just a transfer tool, but a true digital ecosystem. Last year, I wrote that the technical standards adopted — aligned with the Central Bank’s and the market’s vision of making it an evolving payment system — enabled what we can now call the Pix ecosystem.
This approach is far from exclusive to Brazil, but the way the country managed to bring together different pieces into a giant puzzle called the payment system is surprising — and also inspiring for many other digital ecosystems, both local and global.
Pix Automatic is exactly that: the natural continuation of an infrastructure now ready to solve one of the biggest bottlenecks in our financial routine, recurring billing. Whether for gyms, schools, streaming platforms or everyday bills, Pix Automatic comes with a simple but powerful ambition: to automate with intelligence, predictability and user control.
The major turning point here is understanding why traditional direct debit never really took off. When we look at how direct debit works in Brazil, it becomes clear that the dependence on bilateral agreements between companies and banks and its non-interoperable structure locked this feature down. A fintech or small school, for instance, could rarely gain access.
In practice, traditional direct debit requires the company to establish an agreement with each bank in which it wants to offer the service. That means individual negotiations, distinct operational processes and often a custom technical setup for each financial institution.
From a regulatory standpoint, there was no rule ensuring interoperability or universal access. Direct debit regulation was always fragmented, leaving room for different practices across banks. This not only hurt the user experience but also created innovation barriers. Fintechs, for example, were left on the sidelines, forced to rely on alternatives like payment slips or other less efficient, more expensive solutions.
Cases like private schools, neighborhood gyms and medical clinics clearly illustrate this limitation. Many depend on payment slips and face high default rates because they can’t integrate an efficient automatic billing model. Without scale, these institutions lose revenue and waste time on manual control and reconciliation processes. Pix Automatic breaks this model by relying on Pix’s already-established architecture: an open arrangement with clear rules, technical standardization and a wide range of participants.
This changes the entire landscape of implementation and scalability. With Pix Automatic, any Payment Service Provider (PSP) can offer the feature as long as they meet the Central Bank’s technical and regulatory requirements. This also applies to Payment Initiators (PSIs), who take on an even more central role within the Open Finance framework. In other words, recurring billing becomes a public digital good, accessible to all types of institutions, from traditional banks to early-stage startups.
In practice, Pix Automatic works as an authorization and scheduled settlement system. The payer receives a request to authorize the recurrence, with values, frequency and recipient clearly identified, validates the relationship and from that point on everything runs without further interaction, unless there is a cancellation, update or notification. The entire cycle is mapped out: app-based authorization, payment instruction sent, automatic validation and settlement via SPI, Brazil’s Instant Payment System. All in seconds, with full traceability.
The Central Bank didn’t just create clear rules such as value limits, message structures and retry flows, it also defined a minimum required user experience. This means all PSPs must provide dedicated Pix Automatic menus, configurable notifications, a history of authorizations and real-time cancellation options.
This technical standardization is what enables the solution to scale. Recurrence, for example, is a complete data object. It includes frequency, fixed or variable amount, billing cap, start and end dates, and CPF or CNPJ of the involved parties. It is created by the one requesting payment and must be confirmed by the one making the payment. Everything is recorded with statuses such as pending, confirmed or closed. This reduces disputes, prevents abuse and reinforces system governance and stability.
For the recipient, the impact is direct. It provides greater cash flow predictability. With active authorizations, it is possible to anticipate revenue, better plan finances and reduce late payments. With same-day and post-due retries, the risk of failure due to insufficient funds or client distraction is significantly reduced. For the payer, the system offers convenience, control and freedom. They can manage everything via mobile, set maximum values per charge and cancel anytime.
Pix Automatic also reshapes the cost structure. While payment slips have fixed fees and cards involve acquirers, networks, chargebacks and reconciliation, Pix operates with a simplified logic and much lower transactional costs. That means more margin for the biller and fewer fees for the payer.
From an Open Finance standpoint, Pix Automatic also marks a turning point. It becomes the missing link between consents and recurring executions. With it, users can authorize future payments based on existing Open Finance relationships, and the initiator handles everything, from authorization management to charge execution.
Marketplaces, ERPs, school management platforms and condo apps can all embed the feature and unlock new revenue streams. With plug-and-play infrastructure, Pix Automatic enables monetization over payments without relying on acquirers or intermediaries. It is embedded finance in action, with modern and regulated architecture.
Pix Automatic opens a new era for recurring payments in Brazil, with a user-centric logic, interoperable by default and designed for scale.
If you know anyone who would like to receive this e-mail or who is fascinated by the possibilities of financial innovation, I’d really appreciate you forwarding this email their way!
Until the next!
Walter Pereira
Disclaimer: The opinions expressed here are solely the responsibility of the author, Walter Pereira, and do not necessarily reflect the views of the sponsors, partners, or clients of W Fintechs.