“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 percent 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 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.

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,” Mr. 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 like 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.”

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. Mr. 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 passers-by 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, a 63-year-old 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,” Ms. 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.”

Data from Brazil’s central bank shows that Brazilians are indeed relying less on cash, with withdrawals dropping by 8 percent last year compared with the year before and by about a third since 2020. From 2023 to 2024 the use of PIX jumped by 52 percent, while the number of credit card transactions rose by 11 percent and debit card payments climbed 2.5 percent.

The Brazilian authorities said their system had caught on simply because it’s faster, cheaper and smoother to use than other payment methods.

While PayPal is available in Brazil, Zelle and Venmo, which are tied to the U.S. banking system and offer payments only in dollars, are not.

Visa, Mastercard, PayPal, Apple and Meta, the parent company behind WhatsApp, did not reply to requests for comment.

Before PIX, financial life in Brazil was often slower, costlier and far more cumbersome. Moving money was usually done through expensive transfers from one bank to another or cash payment vouchers known as “boletos bancários,” which could take days to clear.

“PIX was a necessity,” said Mario Schapiro, a law professor at the Getúlio Vargas Foundation who has studied the payment method. “And the private sector had no interest in developing a low-cost, accessible financial tool like it.”

Brazil started its homegrown system after studying digital payment methods in the United States, India and China.

The system, analysts say, has played a key role in making Brazil’s financial system more inclusive. Because anyone with an account at either a traditional bank or a digital start-up can use PIX, many low-income people and informal workers who used to deal in cash can now use digital payments, building a track record with financial institutions.

Brazil’s shift to the digital payment platform did have setbacks. Soon after PIX started, criminals spotting an opportunity began abducting people and forcing them to empty their accounts through instant transfers, in what became known as “PIX kidnappings.” Brazil’s Central Bank quickly moved to add more safety features, like limits on nighttime transfers.

As its use has expanded, PIX has transformed the digital payments landscape.

Ralf Germer, a co-founder of PagBrasil, a digital payments company, said that when PIX launched it rendered his firm’s business model, which leaned heavily on cash payment vouchers, largely obsolete. “We saw that the technology was superior,” he said. “So we made a big bet on PIX.”

Using PIX, Mr. Germer’s company built a service allowing cross-border payments between Brazil and neighboring countries and has also rolled out a PIX system in the United States.

Mr. Germer said he didn’t see PIX as an adversary. “We need innovation,” he added. “In my mind, there’s nothing unfair about it.”

Lis Moriconi contributed research.