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Home Business Brazil Suspends WhatsApp’s New Payments System

Brazil Suspends WhatsApp’s New Payments System

by Shera
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whatsapp payments
Brazil’s central bank effectively suspended a newly-launched system allowing users of Facebook Inc’s WhatsApp messaging service to send money via chats, ordering Visa and Mastercard to halt payments and transfers via the system.

The central bank said in a statement that rolling out the service without previous analysis by the monetary authority could damage the Brazilian payments system in the areas of competition, efficiency, and data privacy. 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 central bank’s move is the latest setback in payments for owner Facebook, which pared back its plans for a global payment system called Libra after meeting stiff resistance from regulators. WhatsApp has over 120 million users in Brazil, its second-largest market behind India, where it has also struggled to roll out a payment system.

If Visa and Mastercard do not comply with the order, they would be subject to fines and administrative sanctions, the statement said. 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.

Earlier on Tuesday, before Visa and Mastercard operations with WhatsApp were suspended, the central bank issued a regulation saying it could require market participants to receive previous approval to operate in payments.WhatsApp launched its Brazil services without requesting central bank authorization, as it was operating as an intermediary between consumers and financial institutions. Some observers called the regulator’s decision an overreaction, while others said WhatsApp presented a potential risk in terms of market concentration and privacy.

The Facebook-owned instant messaging application had launched digital payments to WhatsApp users in Brazil in a move expected to disrupt mobile payments globally earlier in the month.

WhatsApp would allow users to send money securely or make a purchase from a local business without leaving their chat, something China’s WeChat has been doing for years.

“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 catalog, customers will be able to send payments for products as well. Making payments simple can help bring more businesses into the digital economy, opening up new opportunities for growth,” announced the firm.

 

 

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