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The United States Trade Representative (USTR) is running a major investigation into Brazil’s allegedly unfair trade practices, involving the Brazilian instant mobile payment system (PIX). This case could influence the broader geopolitical context for digital trade and sovereignty over digital infrastructure. Importantly for the UK, the investigation might have significant implications for aspirations to develop similar mobile payment systems. The targeting of PIX could act as a deterrent to the development of digital infrastructure in the UK and elsewhere, which challenges the dominant position of US financial and tech companies.

Created in 2020 and since managed by the Brazilian Central Bank (BCB), PIX has replaced bank cards for small payments to businesses, due to its very low costs. PIX also enables instant transfers among ordinary people without the need to share bank details or pay any fees. It has quickly become the primary payment method in Brazil, surpassing both cash and card usage, with up to 290 million transactions daily. PIX reaches 90% of Brazil’s population with particularly positive impacts on the financially excluded, the informal economy, and small and medium-sized enterprises (SMEs).

The technology was developed by a small team in the BCB, co-created with a working group of dozens of industry actors, end users, and SMEs. This governance model was central to the success of PIX, and the group has developed into a permanent statutory advisory group. The technical standards are publicly available, and there are various open source free tools to build integrations for websites and apps.

Beyond economic benefits, for many Brazilians, PIX has become a point of national pride and a symbol of digital sovereignty, showing that the country can build indigenous world-class public infrastructure despite the dominance of global big tech companies.

The USTR’s charges against PIX centre on its governance and compliance requirements. US businesses see a conflict of interest in the BCB acting as a competitor in the market of instant payment, as the manager of PIX, while also being the systemic financial regulator. Other complaints cover specific restrictions for foreign card networks, and generally forcing US payment providers to comply with “asymmetric obligations” of higher standards.

Participation in PIX is mandatory for regulated financial entities with a large number of users, but the system is open-access to local and foreign payment operators. Nonetheless, Visa and Mastercard have long complained that PIX hinders their growth in the Brazilian market. Meta has also made allegations that B2C (business to consumers) payments within WhatsApp were temporarily blocked to protect PIX from competition – although at the time both the BCB and the Brazilian competition authorities had voiced technical concerns in their decisions to halt the service.

Brazil rejects all the charges made by USTR, pointing to “legitimate regulatory objectives” in the design and operation of PIX, and demonstrable success in promoting financial inclusion. Brazil maintains that US companies are involved, with Google being the largest “payment initiator” in PIX, due to the ubiquity of contactless payments made through Android mobile phones.  The USTR is trying to frame the current investigation against PIX to be similar to the World Trade Organization case it brought in 2012 against China regarding China UnionPay (CUP) (China – Electronic Payment Services), in which the US was partly successful. Yet, the PIX case is different insofar as PIX is an open-access payment scheme and is not a commercial monopoly.

The Brazilian payment system, and similar frameworks such as India’s Unified Payments Interface (UPI) and Indonesia’s Quick Response Code Indonesian Standard (QRIS) are part of a global transformation of market structures around digital finance, digital infrastructure, and the FinTech sector at large.

PIX is emblematic of the United Nations’ promotion of Digital Public Infrastructure (DPI) to advance social and economic inclusion, government transparency and market competition for sustainable development. In fast-growing post-colonial economies, development is coupled with demands for digital sovereignty and building domestic tech industries. For the designers of India’s UPI, leapfrogging US card companies is escaping US control over data and technology. Mobile payments like PIX are not the same as international inter-bank payment tools such as SWIFT and other systems for large transfers and settlements, yet could be understood as part of a broader “bifurcation” of payment systems away from the US. While the long-term direction of the US dollar as a global currency is difficult to predict, mobile payment networks might limit the ability of the US to use financial sanctions as a key foreign policy instrument.

Even in Western countries traditionally close to the US, “America First” policies and the open alignment of Silicon Valley with the perceived national interests of the current US administration are fuelling a parallel impulse for digital sovereignty. Mobile payments operators in the EU plan to soon cover 15 countries, reaching 84% of the EU population, as a “rapid path forward to European sovereignty and independence”. The EU is also set to exclude “Big Tech” companies from a new financial data sharing system to “guarantee a level playing field and protect the digital sovereignty of consumers”.

The US reaction includes using the USTR 2025 report on unfair trade barriers to target India’s UPI and Indonesia’s QRIS, while using other instruments to target AliPay and other Chinese technologies.. The complaints focus on particular local infrastructure requirements or licensing conditions but are part of a maze of escalating sanctions and tariffs that render outcomes difficult to predict.

We assume that these complaints and investigations about DPI will proceed within the existing framework of trade disputes, whether unilaterally under USTR or at the WTO, and not move to a different sanctions regime. A trade dispute will rest on the justification and proportionality of any anti-competitive side effects of public policies and regulations. In turn, this will depend on whether these local payment systems could be deemed as “digital public goods” or critical digital infrastructure for economic security.

The outcome of the PIX case is likely to influence how British digital public infrastructure policies deal with the interests of US digital technology and financial companies.

The UK has been slow to develop its own mobile payment framework, and an official review warns it is at risk of falling behind international peers, despite pioneering Open Banking, originally introduced as a remedy by the Competition and Markets Authority (CMA).

The UK Government’s National Payments Vision could be more ambitious insofar as it currently merely focuses on banks and retailers, rather than on transfers to individuals, but it is only a matter of time before a system of mobile small payments between individual consumers (C2C) will emerge. Opening the payments market through public infrastructure and interoperability, like Brazil did with PIX, is a key strategy for strengthening competition.

The dilemma for the UK is that, because of the dominant position of US card providers in the payments system, any successful transformation will almost certainly cause a conflict with the United States. The UK Payment Systems Regulator has found that Mastercard and Visa “do not face effective competition”, enabling them to raise their fees by 30% in 5 years.

Digital sovereignty is a complex question for the UK. As a smaller economy, the UK might benefit from new international standards that slow the fragmentation of digital infrastructure to enable interoperability. Hopes that such a consensus to avoid divergent digital architectures would emerge around US-led digital trade policies that coalesced in the WTO E-Commerce Joint Statement Initiative seem dead in the water after the US pulled out of the initiative. In this new reality, the renewed UK’s strategic regulatory alignment with the US on digital finance and on critical technologies such as AI and nuclear, may reduce the room for manoeuvre for the UK to innovate its digital infrastructure, and isolate it from emerging economies and closer allies like the EU.