Brazil Suspends WhatsApp's Payments System to Ensure Fair Competition in Pay Practices

Schragri

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posted on 4 years ago — updated on 1 second ago

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Brazil’s central bank, Banco Central do Brasil, said it suspended Whatsapp's payment services to “preserve an adequate competitive environment” in the mobile payments space.

Brazil’s Central Bank has suspended Facebook’s new WhatsApp payments services in the country, just over a week after the messaging service announced its rollout. In a statement, Banco Central do Brasil, said it was taking the decision to “preserve an adequate competitive environment” in the mobile payments space and to ensure "functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap."

Following the announcement, other banks in Brazil have instructed Mastercard and Visa, which are among the payment partners for Whatsapp in the country, to suspend transfer via the app. Furthermore, companies who fail to comply with the new order will face fines and administrative sanctions. Brazil's move is a major setback for Facebook's payment ambitions, given the fact it is the second-biggest market for WhatsApp after India. To recall, Whatsapp launched a beta version of its payment service in India. However, its parent company Facebook has struggled to gain regulatory approvals to expand the service nationwide. Apart from Brazil and India, WhatsApp is testing its payment services in Mexico as well.

However, a WhatsApp spokesperson said the messaging service would continue working with "local partners" and the central bank to provide digital payments for its users in Brazil using a business model open to more participants, which would address regulators' concerns on market concentration.

WhatsApp unveiled its mobile payments service in Brazil last week. It was the very first time WhatsApp had been able to conduct a nationwide rollout of its payments service in any market. The feature allows users to exchange money with one another and also pay businesses. The Facebook-owned service said that it was not charging any fee to users for sending or receiving money but was charging businesses a 3.99% processing fee.

“The over 10 million small and micro-businesses are the heartbeat of Brazil’s communities. It’s become second nature to send a zap to a business to get questions answered. Now in addition to viewing a store’s catalogue, customers will be able to send payments for products as well,” the company wrote in a blog post published last week.