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.
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.
"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."