Brazil's central bank operates their instant payment network Pix [1] [2] [3] for ~$10M/year [4]. Its not that these are small contracts, but that large, inefficient, unnecessary contracts have become the norm (I argue). Similar example from India's UPI payment system [5]. The US has FedNow to move instant payments for pennies, but everyone in the US ecosystem is avoiding it to continue to private payment system rake [6] (CC networks, Zelle commercial bank network, private wallets, etc).

[1] https://en.wikipedia.org/wiki/Pix_(payment_system)

[2] https://frontierfintech.substack.com/p/55-send-pix-brazils-i...

[3] https://brazilstockguide.com/behind-the-lines/the-cost-of-pi...

> This makes the American dispute more sophisticated than it may first appear. Pix certainly puts pressure on private payment models, card networks and acquirers. It also reduces friction for consumers, small businesses and person-to-person transfers. But its deeper effect is institutional. It turns the bank deposit into an even more efficient payment instrument — and, by doing so, changes the role of banks in liquidity intermediation.

> There is an irony here. For decades, the United States built the narrative of private financial innovation. Brazil, through a public, interoperable and massively adopted system, produced one of the world’s most efficient payment infrastructures. The study notes how unusual Pix adoption was: more than 150 million users in its first year, use by nine out of ten small businesses, and daily volumes capable of reaching about 1% of annual GDP on a single peak day.

> The reading should not be triumphalist. Pix is a powerful innovation, but it is not cost-free for the financial system. It improves the user experience, reduces transaction costs and increases competition in payments. At the same time, it requires banks to hold more liquidity and may reduce the transformation of deposits into credit. For the United States, Pix appears as a digital-trade issue. For Brazil, it is a question of financial sovereignty. For banks, it is a question of liquidity. Pix began as a button inside an app. It became a piece of financial policy — and now, of geopolitics.

[4] https://news.ycombinator.com/item?id=44753626

[5] https://en.wikipedia.org/wiki/Unified_Payments_Interface

[6] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...