WhatsApp's payments service suspended in Brazil: Here's why
Just 10 days back, WhatsApp had launched its much-coveted payments service in Brazil, its second-biggest market after India, and opened a way to send and receive money on chat. Now, Brazil's central bank has issued an order to suspend the service, citing concerns over its anti-competitive nature in the online payments market. Here is all you need to know about it.
Service for peer-to-peer transfers
Based on Facebook Pay, WhatsApp's payments service allowed users to send money to their contacts just like sending a photo/video on chat. The feature, set up with several local banks, launched for all WhatsApp users in Brazil on June 15, something that came as a bit of a surprise for users in India, where WhatsApp Pay has been in testing stage since 2018.
Now, Brazil's central bank has suspended the service
Within days of its launch, the WhatsApp payments service has been suspended by the Central Bank of Brazil. The apex institution has ordered Visa and Mastercard - the payment partners of the Facebook-owned company - to shut down the project and immediately halt all transfers through the chat app. If failed, they would be subject to fines and administrative sanctions, the bank has clarified.
Anti-competitive nature appears to be the problem
In a statement, the central bank implied that Facebook rolled out the service across the country without having it properly vetted and approved, which threatens the Brazilian payments system in areas of competition and privacy. "The reason is to preserve an adequate competitive environment, ensuring an interoperable, fast, secure, transparent, open, and economical payment system," it added in the statement.
This comes as a setback for WhatsApp's payments ambitions
The action from the central bank will eventually open a case that will decide if WhatsApp should have notified the bank in advance and whether the payment service should be allowed or not. Either way, these developments mark a major setback for WhatsApp payments, making their future uncertain in Brazil. The chat-based service was pitched as a natural addition for businesses operating via WhatsApp.
Here's what WhatsApp said on the matter
"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. In addition, we support Central Bank's PIX project on digital payments."