(Bloomberg) -- Brazilian Orli Machado plans to hire about 230 people in the US to expand his firm, which provides software to banks and credit unions offering the Federal Reserve’s new instant-payment system.
Machado, founder and chief executive officer of Barueri-based C&M Software, is planning to expand his company’s headcount in the US to about 250 people through the end of 2024, a wager that more banks will adopt the central bank’s system, known as FedNow. He also hired Ricardo Lanfranchi, a former Banco Bradesco SA executive, to be his CEO for the US.
Most of C&M’s hiring will probably be in Texas, because of the state’s central US time zone, Machado said, adding that the idea is also to open sales offices in New York, California and Chicago. He will also be hiring in Miami, the company’s US headquarters.
Launched in July, FedNow lets people and businesses that are clients of participating financial institutions make real-time cash transfers, 24 hours a day, including on the weekends. Machado says the potential is huge: He already has about 20 customers among the more than 150 institutions offering FedNow, out of a total of about 9,000 US banks and credit unions that are allowed to participate.
A pioneer in instant-payment systems, Machado was one of the informal advisers on the creation of Pix, Brazil’s version of FedNow. Launched by that nation’s central bank in 2020, Pix has already surpassed credit and debit cards as the preferred method of payment in Brazil, recording more than 8 billion transactions in the first quarter of this year. With no fees for individuals, it’s been likened to a national addiction.
“FedNow is connecting all the banks in a web in the US for the first time, and is allowing one bank to do bill-payment services on behalf of another,” Machado said in an interview.
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Pix’s success caught the attention of the Fed, along with many central bankers across the globe, including from nations in Latin America such as Colombia, Chile and Paraguay. Machado said he is informally advising all of them. Regulators like instant payments because they help reduce systemic risks. The money is transferred in real time, so there’s no risk a customer fails to receive funds if the bank that send the funds goes broke during the transfer process.
Still, there are several reasons FedNow will take longer to win acceptance in the US than in Brazil. Many Americans still pay some of their bills using paper checks sent through the mail, for example.
“It will take time for FedNow to mature culturally and start to be adopted, which is why my projection is for it to fully gain popularity in 2025,” Machado said.
Another key difference: Brazil’s central bank forced lenders to adopt Pix, while joining FedNow is entirely voluntary. Competition from popular US payment companies such as Venmo, PayPal and Zelle is another obstacle. But those offerings don’t include insurance from the Federal Deposit Insurance Corp.
With 255 employees in Brazil, C&M Software offers products to about 60% of Brazilian fintechs. It has about 90% of the market for software used to open new digital accounts in Brazil, he said.
When he opened a unit of his firm in Miami in 2015, Machado was seeking a shield against one of the many economic downturns in Brazil. The 58-year-old founded his company in 2000 while working with the central bank to develop the Brazilian payments operation known as SPB, a clearing and settlement system between financial institutions. Before that, Machado worked at IBM Corp. providing software to banks and other financial companies.
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