What next for WhatsApp in Brazil?

What next for WhatsApp in Brazil?

It’s only been a week since the announcement that Brazil will be the first market where people can send and receive money via WhatsApp using Facebook Pay. Now, it seems, everything is on hold after an intervention by Brazil’s central bank.

According to Reuters and local news reports, the bank has ordered the scheme’s partners, Visa and Mastercard, to halt payments and transfers via the system, which was launched last week. The system allowed users to transfer funds to individuals or local businesses within a chat – attaching payments, essentially.

The central bank has been quoted as saying that rolling out the service without previous analysis by the monetary authority could damage the Brazilian payments system. It cited concerns about competition, efficiency and data privacy. It’s worth mentioning too that some private banks have cited security and accountability issues.

WhatsApp launched its Brazilian services without requesting central bank authorization, but that appears to have been within the rules, given that it was operating as an intermediary between consumers and financial institutions.

To begin with, the service was intended to support debit or credit cards from Banco do Brasil, Nubank, and Sicredi on the Visa and Mastercard networks, but WhatsApp claimed it had built an open model “to welcome more partners in the future”.

On the back-office side, WhatsApp is working with payments processor Cielo. However, Brazil’s antitrust watchdog, Cade, has blocked this partnership, citing concerns over market concentration, given that the deal would bring together Brazil’s largest payment processor and a globally successful messaging service. 

Interestingly the central bank’s own instant payments system, called PIX, is on the way in November. News reports suggest that some 980 institutions will offer PIX from November onwards, with 120 participating directly and 860 indirectly.

Why this intervention has happened now rather than before the system began its rollout, is unclear. There is also a certain irony to this chain of events as many observers assumed that WhatsApp decided not to launch the payment service in its biggest market – India – due to regulatory issues.

WhatsApp has over 120 million users in Brazil, which is its second-largest market behind India.

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