Key Takeaways
- DLocal’s move to become a direct participant in Brazil’s Pix system is a strategic pivot from being a simple gateway to an integrated infrastructure player, offering greater control over costs, latency, and product innovation.
- The scale of Pix is immense, having processed nearly 42 billion transactions in 2023. Direct access allows DLocal to target a larger share of this volume more efficiently, particularly in the lucrative cross-border segment.
- Direct participation is expected to improve DLocal’s gross margins in its Brazilian operations by eliminating intermediary fees, a critical factor given the company’s focus on profitability and operational leverage.
- This integration serves as a potential blueprint for DLocal’s expansion in other emerging markets with burgeoning instant payment systems, such as India (UPI) or Mexico (CoDi), creating a key competitive differentiator.
DLocal’s recent confirmation as a direct participant in Brazil’s instant payment system, Pix, is far more than a simple operational upgrade. It represents a significant strategic entrenchment into the core financial infrastructure of one of the world’s most dynamic digital economies. By securing a direct line to the Banco Central do Brasil (BCB), the operator of Pix, DLocal is positioning itself to gain greater autonomy, reduce transactional friction, and enhance its economic model in a market that has become a global case study in payment innovation.
Deconstructing the Pix Phenomenon
To appreciate the significance of DLocal’s move, one must first grasp the scale and velocity of Pix’s adoption. Launched in late 2020, the system has fundamentally rewired Brazilian commerce. Its success, driven by zero cost for individuals and negligible cost for businesses, has been nothing short of spectacular. While initial reports noted impressive early growth, the most recent data from Brazil’s central bank paints a picture of complete market saturation and dominance.
In 2023 alone, Pix handled almost 42 billion transactions, a 75% increase over the previous year. This volume now substantially exceeds the combined transactions of credit and debit cards in the country, a feat achieved in under four years. [1, 2]
| Metric | Figure | Context |
|---|---|---|
| Total 2023 Transactions | 41.9 billion | Represents a 75% year-on-year growth from 2022. |
| Total 2023 Value (BRL) | R$17.2 trillion | Equivalent to approximately £2.6 trillion or $3.3 trillion. |
| Registered Users | Over 160 million individuals | Represents roughly 80% of the adult population in Brazil. [3] |
This ecosystem is no longer an alternative payment method; it is the primary method for a vast portion of the population and an increasingly critical one for businesses. For a company like DLocal, which specialises in connecting global enterprises to emerging markets, fluency and efficiency in Pix are not optional—they are paramount.
The Strategic Calculus of Direct Participation
Prior to this development, DLocal, like many other payment service providers, would have accessed Pix through partner banks acting as intermediaries. While functional, this model introduces dependencies, potential points of failure, and, crucially, costs. Direct participation fundamentally alters this dynamic.
From Intermediary to Architect
By connecting directly to the central bank’s settlement system, DLocal sheds its reliance on third parties. The practical benefits are threefold. Firstly, it reduces transaction latency and improves reliability, which is a critical factor for enterprise clients processing high volumes of payments. Secondly, it provides greater control and flexibility to design bespoke payment flows and solutions. This could include more sophisticated refund processes, recurring payment setups via the upcoming “Pix Automático” functionality, or specialised treasury services. [4] Thirdly, it offers richer data, which can be used to refine risk management and reconciliation processes.
The Margin Question
Perhaps the most compelling commercial reason is the impact on profitability. While intermediary fees may be fractions of a percentage point, they become substantial when applied to the immense Total Payment Volume (TPV) DLocal processes. In its Q1 2024 results, the company reported a group TPV of $5.1 billion, a 49% increase year-on-year, with revenues of $184.4 million. [5] Brazil is one of its largest and most important markets. Eliminating the middleman on Pix transactions should translate directly into an improved gross margin for its Brazilian operations. This operational leverage is a key narrative for investors, especially as the company continues to scale.
This move fortifies DLocal’s competitive position against other cross-border specialists like EBANX and global players such as Stripe and Adyen, all of whom are vying for dominance in Latin America’s largest economy. Having direct access can become a significant differentiator when pitching to large multinational corporations that prioritise efficiency and cost-effectiveness.
A Blueprint for Global South Expansion?
The strategic importance of the Pix integration extends beyond the borders of Brazil. The world is witnessing a proliferation of real-time payment systems (RPS) inspired by the success of models like Brazil’s Pix and India’s Unified Payments Interface (UPI). Mexico’s CoDi and Colombia’s developing system are other examples within DLocal’s core region. [6]
The technical, regulatory, and operational expertise DLocal develops by integrating directly with Pix can serve as a powerful playbook. It creates a template that could accelerate its ability to establish similar deep-infrastructure connections in other key emerging markets. This capability could prove to be a durable competitive advantage, allowing DLocal to offer a more consistent and efficient service level across different geographies than competitors who may rely on a patchwork of local banking partners.
This is not without challenges. Each country’s regulatory environment is unique, and gaining direct access to central bank infrastructure is often a complex and capital-intensive process. However, successfully executing it in a market as significant as Brazil provides both a proof of concept and a wealth of institutional knowledge.
For investors, DLocal’s direct participation in Pix is a clear signal of its maturation from a pure payment gateway to a more embedded financial technology infrastructure provider. The immediate focus will be on tracking TPV growth and margin expansion in Brazil in the coming quarters. The more speculative, and arguably more significant, hypothesis is whether this move marks the beginning of a new strategic phase—one where DLocal systematically builds direct payment rails across the Global South, creating a network that is difficult and expensive for competitors to replicate.
References
[1] Banco Central do Brasil. (2024). Pix Statistics. Retrieved from the official BCB statistics portal for payment systems.
[2] International Monetary Fund. (2023). Brazil: A Short-Term Boost from Pix? IMF Elibrary. Retrieved from https://www.elibrary.imf.org/view/journals/002/2023/289/article-A004-en.xml
[3] Checkout.com. (n.d.). What is Pix?. Retrieved from https://www.checkout.com/blog/what-is-pix-payment-system-real-time-payments-in-brazil
[4] Payments, Cards & Mobile. (2023). Pix Automatico launch for recurring payments in Brazil. Retrieved from https://www.paymentscardsandmobile.com/pix-automatico-launch-for-recurring-payments-in-brazil/
[5] DLocal. (2024, May). DLocal Reports First Quarter 2024 Financial Results. DLocal Investor Relations. Retrieved from their official investor site.
[6] Flagship Advisory Partners. (2023). Pix is Redefining Brazil’s Payment Mix. Retrieved from https://insights.flagshipadvisorypartners.com/pix-is-redefining-brazils-payment-mix
[7] ainvest. (2024). DLocal (DLO): Pioneering the Digital Payment Revolution in Emerging Markets. Retrieved from https://ainvest.com/news/dlocal-dlo-pioneering-digital-payment-revolution-emerging-markets-2507
