Brazil suspends WhatsApp digital payments

Daniel Fowler
June 25, 2020

Early this month, Facebook announced the introduction of WhatsApp payments and Brazil was the first country this feature would be rolling out in. Starting the service without the regulator's green light could generate "irreparable damage to the system, especially what concerns competition, efficiency and data privacy", the banks said, adding that Mastercard and Visa could face fines if they don't comply.

While a WhatsApp spokesperson said: "Our goal is to provide digital payments to all WhatsApp users in Brazil using an open model and we will continue to work with local partners and the Central Bank to make this possible". WhatsApp has over 120 million users in Brazil, its second-largest market behind India, where it has also struggled to roll out a payments system.

Banco Central do Brasil's pushback is a serious blow to Facebook's ambitions in the payment space, and mirrors the firm's difficulties in gaining regulatory approval in the vast Indian marketplace.

On Tuesday Brazil's central bank suspended all operations on WhatsApp. Apart from Brazil and India, WhatsApp is testing its payment services in Mexico as well.

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The system, launched last week in a nationwide rollout, allowed users to transfer funds to individuals or local businesses within a chat, attaching payments as they would a photo or video.

The Banco Central do Brasil's motivation for the decision "is to preserve an adequate competitive environment, which ensures the functioning of an interoperable, fast, secure, transparent, open and cheap payment system", it says.

The service was to be free for all personal users, much like WhatsApp's messaging service, but businesses would be charged processing fees similar to those they might pay when accepting credit card transactions.

A source familiar with the matter told Bloomberg the central bank's decision took WhatsApp by surprise, and the two had been in regular contact before the announcement. "In addition, we support Central Bank's PIX project on digital payments".

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