Pix MED explained: How Brazil’s special return mechanism fights payment fraud

  Written byGabriel Falk Product Manager (Pix)

Our product team has watched Pix transform the way Brazilians pay, bringing new opportunities for merchants, but also new challenges with fraud. As Pix payments continue to grow at record speed, fraud response mechanisms have become just as critical as acceptance itself. 

This guide aims to give merchants a practical look at how Pix MED works, including the latest updates under MED 2.0, why it matters, and what to expect from the system.

What you need to know

• Pix MED is a process regulated by the Central Bank of Brazil to reverse fraudulent Pix payments.
• It’s specifically designed for fraud scenarios—like scams or account takeovers—not for customer complaints or accidental purchases.
• Only the payer’s PSP (the bank or fintech sending the money) can start the MED process when fraud is reported.
• Funds can be frozen for up to 7 days, with mandatory blocking applied as soon as an infraction is received, if they’re still in the receiver’s account.

At a glance

Pix MED allows payment service providers (PSPs) to open an infraction when there is a strong suspicion of fraud. A payment reversal is then executed if the fraud is later confirmed, in line with Central Bank rules. This process helps protect payers while managing risk for merchants and preserving the integrity of the Pix system.

Pix has transformed payments in Brazil, and the Pix payment system has billions of transactions every month and more use than credit cards for eCommerce. But instant payments also mean faster fraud risks. The Central Bank launched the Mecanismo Especial de Devolução (MED), or Special Return Mechanism, to address these.

For merchants active in Brazil, MED is now a fundamental rule for handling fraud and managing disputes.

What is Pix MED?

Pix MED is the official, mandatory mechanism defined by the Central Bank of Brazil for reversing Pix payments in confirmed cases of fraud. All participants in the Pix scheme, banks and fintechs alike, are required to comply with MED rules.

Think of it as a “fraud-only” safety net for Pix. If someone’s account is compromised or tricked into sending money, MED steps in to try to recover those funds, following a regulated path to make sure claims are genuine.

Unlike credit card chargebacks, which can include a range of issues from dissatisfaction to error, MED is laser-focused on protecting payers in clear cases of fraud, like scams or unauthorized account use. Banks and fintechs are required to investigate before any money is sent back, so every claim is checked carefully.

The goal is not to resolve all types of payment issues. MED is reserved for situations where there’s a strong indication that a transaction was carried out under fraudulent circumstances. Everyday customer disputes or changes of mind aren’t handled through this process.

MED vs. Pix infractions: What’s the difference?

Understanding the difference between MED and Pix infractions helps avoid confusion. Pix infractions are a notification between PSPs used to flag suspected irregularities or misbehavior, not operational errors. The receiving PSP reviews the transaction to check for fraud. MED is only applied if fraud is confirmed, allowing funds to be reversed under Central Bank rules.

So, while infractions might cover a variety of complaints, MED focuses strictly on returning money when fraud is confirmed. The distinction is important because it defines what merchants and customers can expect if something goes wrong.

When does MED apply?

MED comes into play only for fraud-related issues and can be triggered only after an infraction has been evaluated, in cases such as:

• Scams and trickery
• Account takeovers (for example, if someone gains access to your banking app without permission)
• Strong indications of fraud reported by the payer

MED does NOT cover:

• Disagreements over products or services (“This isn’t what I ordered”)
• Usual refund requests or buyer’s remorse
• Price disputes
• Honest mistakes that don’t involve fraud (unless those stem from a scam)

In a few words: unless there’s a clear suspicion or evidence of fraud, the MED process won’t apply. This ensures that only well-founded cases get reviewed under this system, keeping it efficient and focused.

How does the MED process work?

Here’s a step-by-step of what happens:

1. Notification: The payer tells their bank there’s a problem. If someone notices a suspicious Pix transaction on their account, the first move is to notify the financial institution.
2. Trigger: The payer’s PSP (bank/fintech) opens an infraction. It’s important to note that only the payer’s financial institution can trigger an infraction; the recipient or their PSP can’t initiate this process.
3. Freezing funds: The receiver’s PSP reviews the case. Only the exact payment amount is frozen, never the whole account. This flow is designed to be precise: just the suspicious payment is frozen so business can continue as usual for the account holder, unless there’s more extensive fraudulent activity.
4. Investigation: Both PSPs have up to 7 days to exchange information and sort things out. During this period, banks and fintechs review details, share evidence, and decide. The system is built to ensure things move quickly, so funds aren’t left in limbo for long.
5. Resolution:
   1. If it’s fraud: the infraction is approved, and the MED refund is opened to recover the funds back to the payer.
   2. If not: the frozen funds are released back to the receiver.

In practice, sometimes only a portion of the money might be available for return if the recipient has withdrawn or spent part of the funds already.

By laying out each step, the MED process aims to provide certainty to all parties involved, keeping legitimate transactions flowing while responding swiftly to fraud cases.

What’s new with MED 2.0?

As scams evolve, so does the response. MED 2.0 strengthens how Pix handles fraud by making fund recovery faster, and harder to bypass. Key upgrades include:

• More standardization: Clearer rules, statuses, and timelines across all participating banks and fintechs, reducing inconsistent handling.
• Mandatory, automatic fund blocking: When an infraction is received, PSPs must immediately block any available funds related to the disputed transaction, limited to the exact amount, not the full account.
• End-to-end traceability: Instead of stopping at the first receiver, MED 2.0 allows funds to be traced and recovered across multiple PSPs if the money has moved.
• Clearer timelines: Tighter and more predictable deadlines for investigation and refunds, helping all parties understand what happens and when.

Previously, Pix fraud often meant instant and irreversible losses once funds left the account. MED 2.0 improves the chances of freezing and recovering money early, even when payments are quickly redistributed.

For businesses, this means fraud cases are handled more consistently and transparently, with less uncertainty around balance impacts. While not every case results in a full recovery, MED 2.0 significantly improves the system’s ability to respond before funds disappear.

Pix MED vs. Credit card chargebacks: A quick comparison

Here’s how Pix MED stacks up against typical chargeback processes:

What does this mean for merchants? Unlike credit card chargebacks, where funds are often pulled from a business without immediate review, Pix MED means the merchant’s input is limited to whatever supporting evidence they provide to their payment service provider. The process is quick, focused, and doesn’t allow for lengthy dispute cycles.

Key Takeaways

• Designed for Security: Pix MED protects trust in instant payments by targeting fraud directly.
• Clear Boundaries: MED is only for fraud, not for regular disputes or dissatisfaction.
• Merchant Impact: Working closely with a knowledgeable PSP helps merchants respond quickly and share relevant details in case of trouble.
• Evolving Protections: MED 2.0 aims for faster, more consistent fraud resolution as instant payments continue to grow.

Pix has been part of our work at dLocal since its early days. Our teams of Pixperts work closely with merchants and local partners in Brazil to help interpret these rules as they change and understand what they mean in day-to-day operations. If you have questions about Pix MED or how a specific case might apply to your business, reach out to your AM or connect with our team.