Circle launches USDC in Brazil and Mexico through local payment systems

Author: Aiying; Source: Aiying Payment Compliance

In recent years, Circle has been actively expanding its global business, especially in markets where demand is rising rapidly. Its goal is to make it easier for more businesses and consumers to use Digital Money, such as USDC, which is pegged to the dollar, making it more convenient for both payments and transfers. Recently, Circle has accelerated its expansion in Latin America. In September 2024, the company announced partnerships with major banks in Brazil and Mexico, enabling local users to more easily access USDC through the real-time payment systems of both countries - Brazil’s PIX and Mexico’s SPEI. This is not only an important step for Circle in the Latin American market, but also expands the application of USDC from cross-border transactions to local payments and fund flows, bringing more flexible use.

Expansion of the Brazilian and Mexican markets

The PIX system in Brazil was launched by the Central Bank of Brazil in 2020, allowing individuals, businesses, and governments to conduct real-time transactions 24/7 through mobile numbers or email. By August 2024, the PIX system has already had over 168 million users, covering almost all types of financial transaction needs. By integrating USDC with PIX, Circle provides Brazilian businesses and consumers with a faster and more convenient way to access USDC, completely avoiding the cumbersome and expensive fees of traditional international wire transfers.

Similarly, Mexico’s SPEI system, which has been managed by the central bank since 2004, has been widely used throughout the country, especially in cross-border transfers and electronic payments. In 2023, the SPEI system processed more than 3.3 million transactions, enabling Mexican users to transfer funds easily and quickly. By integrating with SPEI, Circle enables businesses and consumers to convert Mexican pesos to USDC in a matter of minutes, eliminating the need for time-consuming international wire transfers.

According to Aiying, in order to enhance these features, Circle has also partnered with BTG Pactual investment bank in Brazil and Nubank, which not only allows USDC to circulate more quickly through local banks, but also greatly enhances the trust of enterprises and individuals in it. They no longer need to convert local currency into US dollars in order to use USDC directly for transactions.

Through this series of measures, Circle has significantly reduced transaction time from several days to several minutes, while also dropping the cost of cross-border remittances. This provides a more efficient and cost-effective option for businesses in Brazil and Mexico, especially those that rely on cross-border transactions and remittances denominated in US dollars.

Impact on the Latin American market

USDC has shown great potential in the Latin American market, especially in Brazil and Mexico. Due to the large amount of economic activities in the region, especially cross-border trade and remittances, which are usually denominated in USD, the introduction of USDC provides a more cost-effective solution for businesses and consumers in these countries. In the context of these USD-dominated transactions, USDC becomes an ideal choice by simplifying the process and dropping costs.

Cross-border trade is one of the lifelines of the Latin American economy. According to Aiying, trade between Mexico and the United States amounts to $800 billion annually, and Brazil’s foreign trade is also highly dependent on the US dollar, with approximately 95% of international commodity trade settled in US dollars. Traditionally, such transactions require international wire transfers, which are cumbersome and expensive. However, with USDC, companies can bypass the complicated procedures of banks and settle directly in digital dollars, significantly reducing transaction time and costs. This method is undoubtedly more attractive for companies engaged in frequent cross-border transactions.

In terms of remittances, USDC also demonstrates its unique advantages. Taking the year 2023 as an example, the total remittances from the United States to Mexico reached 63 billion US dollars, accounting for about 4% of Mexico’s GDP. Traditional remittance service fees are usually as high as 6.35%, but through USDC, remittances are not only cheaper, but transactions can also be completed in a few minutes. This saves a lot of time and costs for families and small businesses that rely on international remittances, improving their quality of life and operational efficiency.

More importantly, the introduction of USDC also helps enterprises reduce their reliance on US dollar cash and drop the risk of Exchange Rate Fluctuation. Through USDC, enterprises can more flexibly convert between local currency and digital dollars, effectively managing forex risks in cross-border payments.