RIO DE JANEIRO — “Cash or card?” For millions of Brazilians, the answer is neither.

Instead, the payment of choice in Latin America’s largest nation is often PIX, a fast and free digital system Brazilians use every day to shop, pay bills, settle bar tabs and buy snacks on the beach.

The payment method has become immensely popular, adopted by more than 80% of Brazil’s population. Outside the country, it has drawn praise from leading economists, who have gone as far as to call it the future of money.

Yet its success has also set off blowback: The Trump administration, as part of its aggressive economic and political campaign against Brazil, is investigating PIX, accusing the payment system of unfairly undercutting U.S. financial and technology companies like Visa and Apple.

The standoff over PIX has intensified the diplomatic crisis between Brazil and President Donald Trump, who has also imposed steep tariffs and sanctions in an effort to prevent former President Jair Bolsonaro, his political ally, from being found guilty of plotting a coup.

Tense times

U.S. criticism of the payment method has hit a nerve in Brazil, which has cast it as another attack on its sovereignty. “PIX belongs to Brazil and the Brazilian people!” the government declared in a social media campaign that has gone viral.

Brazil’s president, Luiz Inácio Lula da Silva, has dismissed U.S. claims that PIX hurts U.S. interests or locks American firms out. “We cannot be penalized for creating a fast, free and secure mechanism that facilitates transactions and stimulates the economy,” Lula wrote in a recent opinion essay in The New York Times.

In its speed and ease, PIX is similar to Zelle, the payment system run by a consortium of U.S. banks. But unlike other similar digital services, like PayPal, Pix carries no fees for individuals and small businesses.

It allows users to make and receive instant payments, using a bank account and an identifying key such as a phone number or QR code. Since February, many Brazilians can use PIX through contactless payments on their phones.

Since Brazil’s central bank launched PIX in 2020, it has been adopted by 175 million people and now accounts for nearly half of the country’s financial transactions. It has even crept into the vernacular: “What’s your PIX?” in Brazil is akin to “I’ll Venmo you.”

But the Office of the U.S. Trade Representative is investigating PIX, claiming that Brazil has given an unfair advantage to the digital payments system by requiring all banks to offer it.

U.S. trade authorities also say that, by protecting consumer data that PIX collects, the Brazilian government is hurting American companies that use such information to make business decisions and develop new products.

“U.S. companies see this data as critical,” said Ignacio Carballo, a senior consultant at Payments and Commerce Markets Intelligence, a research firm based in San Francisco. “This places a lot of power in the hands of Brazil’s government.”

economic blueprint

PIX is also a monetary blueprint for the BRICS alliance of developing economies, which includes Brazil, Russia, India, China and South Africa, as it seeks to create an international payment platform aimed at reducing reliance on the U.S. dollar. Trump has threatened the bloc with tariffs if it tries to create a rival currency.

On a busy corner in Rio de Janeiro on a recent weekday morning, the ubiquity of Brazil’s digital payment system was on full display.

A woman selling bright hair wraps offered small discounts to clients who paid with PIX. Nearby, a homeless man asked passersby for spare change, propping up a cardboard sign scrawled with a PIX key.

Across the street, at a cluster of food stands serving breakfast, customers shouted orders as they asked vendors for their PIX. Merchants brandished laminated QR codes as they cracked eggs onto grills and poured steaming coffee into plastic cups.

“PIX made everything better, much easier,” said Manuel Souza, 63, a waiter buying coffee and a pastry before work. He uses PIX for most of his spending, he said, including to pay his rent. “Big or small purchase — it’s all PIX.”

For small vendors like Luciana Gonçalves de Pontes, 44, who sold cellphone cases, cables and gum from a tiny stand, PIX has made it easier to settle the bill with her suppliers and cheaper to receive payments from customers.

“It’s hard enough to make a living,” Gonçalves said. “At least PIX cuts our costs a little.” She now accepts credit and debit cards only on larger purchases, she said, because of the higher fees those transactions carry.

Brazil’s finance minister, Fernando Haddad, said that PIX was actually replacing cash, not competing with U.S. companies. “There is a lot of misinformation about what PIX is,” he said in a recent interview. “It is a sovereign digital currency. That’s all it is. It’s nothing more.”