Brazil suspends WhatsApp’s payment feature just a month after its launch
Brazil’s central bank has directed Visa and Mastercard to suspend payments through WhatsApp, threatening fines if they fail to comply
Brazil’s central bank has suspended WhatsApp’s payments feature that was launched earlier this month in the country. The bank has indicated that the action against WhatsApp Pay has been taken in the interest of “preserving the adequate competitive environment,” with the bank saying it will review the risks posed by the firm to the present financial system in the country. Authorities have also asked Visa and Mastercard to stop processing any payments or transfers through the app — threatening the texting app with fines.
WhatsApp launched the payments feature in Brazil this month; as it is the apps second-largest market with over 120 million users. The firm has tested the Indian and Mexican markets over the last two years, but choose Brazil for the first full-scale rollout of the feature.
The payment feature is a key milestone in WhatsApp’s long-term plan to offer commerce within the app. More than five million merchants across the world use the business version of the app and it is the only source of online presence for many local stores in developing countries like India and Brazil.
WhatsApp has partnered with the Banco do Brasil, Nubank, and Sicredi banks to bring the feature to life in Brazil. Users who have accounts with any of these banks could add their Visa or Mastercard debit or credit card to process their payment through the app. The system was intended to extend across other Facebook-owned apps, with merchants charging a 3.99% processing fee for accepting payments on WhatsApp.
However, the Brazilian central bank has put an abrupt stop to WhatsApp’s plans. The decision was taken to ensure the feature allows for the “functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap,” the bank stated in its announcement.
The suspension will allow the central bank to assess any possible risk posed by the firm’s payment feature, the bank said. It also enables the bank to evaluate whether the payments system meets regulatory rules. The move will ensure that the no “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.
“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,” a WhatsApp spokesperson said. Reports have also suggested that the company was surprised by the central bank’s decision considering that the two sides were in regular contact during the launch of the feature.
The post Brazil suspends WhatsApp’s payment feature just a month after its launch appeared first on Coin Journal.
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Harshini Nag, Khareem Sudlow