Circle Launches USDC in Brazil and Mexico via Local Payment Systems

Author: Aiying; Source: Aiying Payment Compliance

In the past few years, Circle has been actively expanding its global business, especially in markets where demand is growing rapidly. The goal is to enable more businesses and consumers to easily use USDC, a digital currency pegged to the US dollar, which is more convenient for both payment and transfer. Recently, Circle has accelerated its layout in Latin America. In September 2024, the company announced a partnership with major banks in Brazil and Mexico to enable local users to obtain USDC more conveniently through the real-time payment systems of these two 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 capital flows, bringing more flexible use.

Expansion in Brazil and Mexico

Brazil's PIX system was launched by the Central Bank of Brazil in 2020, allowing individuals, businesses and governments to conduct real-time transactions around the clock via mobile phone numbers or emails. By August 2024, the PIX system had more than 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 obtain USDC, completely avoiding the cumbersome and high costs of international wire transfers in the past.

Similarly, Mexico's SPEI system has been widely used throughout the country since it was managed by the Central Bank in 2004, especially in interbank transfers and electronic payments. In 2023, the SPEI system processed more than 3.3 million transactions, allowing Mexican users to easily and quickly transfer funds. Through the integration with SPEI, Circle enables businesses and consumers to convert Mexican pesos to USDC in minutes, eliminating the need for time-consuming international wire transfers. To enhance these features, Circle has also partnered with Brazil’s BTG Pactual Investment Bank and Nubank, which not only allows USDC to circulate more quickly through local banks, but also greatly enhances the trust of businesses and individuals. They no longer need to convert local currencies into US dollars and can directly use USDC for transactions. Through this series of measures, Circle has significantly shortened transaction times from days to minutes, while also reducing the cost of cross-border remittances. This provides a more efficient and lower-cost option for businesses in Brazil and Mexico, especially those that rely on US dollar-denominated cross-border transactions and remittances.

Impact on the Latin American Market

USDC has shown great potential in the Latin American market, especially Brazil and Mexico. Since a large number of economic activities in Latin America, especially cross-border trade and remittances, are usually denominated in US dollars, the introduction of USDC provides a more affordable solution for businesses and consumers in these countries. In the context of these transactions being dominated by the US dollar, USDC has become an ideal choice by simplifying processes and reducing costs.

Cross-border trade is one of the lifeblood of the Latin American economy. According to Aiying, trade between Mexico and the United States is as high as US$800 billion per year, and Brazil's foreign trade transactions are also highly dependent on the US dollar. About 95% of international commodity trade is 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 directly use digital dollars for settlement, greatly reducing transaction time and costs. This approach is undoubtedly more attractive for companies that frequently conduct cross-border transactions.

In terms of remittances, USDC also demonstrates its unique advantages. Taking 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 with USDC, remittances are not only cheaper, but transactions can be completed within minutes. This saves a lot of time and money for families and small businesses that rely on international remittances, and improves their quality of life and operating efficiency.

More importantly, the introduction of USDC has also helped companies reduce their dependence on US dollar cash, while also reducing the risks brought by exchange rate fluctuations. With USDC, companies can more flexibly convert between local currencies and digital dollars, and effectively manage foreign exchange risks in cross-border payments.