Brazil Central Bank Suspends WhatsApp’s Payments Service

Brazil has suspended WhatsApp mobile payments service in the country a week after its launch in what is the latest setback for Facebook.

June 24 2020 | AtoZ Markets – The Brazilian central bank has suspended the instant messaging app’s mobile payments service in the country, in merely a week of its rollout.

Brazil central bank orders WhatsApp, Visa & Mastercard to suspend payment service

In a statement on Tuesday, the central bank of Brazil said it is concerned about an “adequate competitive environment” in the Brazilian mobile payments market with the entrance of a giant like Facebook.

Notably, Brazil is the second-largest market for WhatsApp, following India.

The central bank also highlighted that it did not have the opportunity to analyze WhatsApp’s mobile payments system. The regulator now wants to assure if the service is “interoperable, fast, secure, transparent, open and inexpensive.”

The Central Bank of Brazil has also ordered Visa and Mastercard to immediately suspend services from processing payments on WhatsApp.

Was the regulator’s decision an overreaction?

Some observers called the regulator’s decision an overreaction, while others said WhatsApp presented a potential risk in terms of market concentration and privacy.

“It is a bit odd that the central bank decided to suspend WhatsApp as the regulator is already able to oversee all market participants which joined WhatsApp,” said Carlos Daltozo, co-head of equities at Eleven Financial. “Besides that, WhatsApp is open to form new partnerships.”

Facebook launched WhatsApp payments service in Brazil on June 16 to over 120 million Brazilian users.

WhatsApp’s payments services supported Visa and Mastercard cards from three banks – Banco do Brasil, Nubank, and Sicredi. Also, transactions were processed via Brazil-based payments processor Cielo.

Explaining the payments service, Facebook co-founder and CEO Mark Zuckerburg even said that sending and receiving money is “as easy as sharing photos.”

The Administrative Council for Economic Defense (CADE), Brazil’s antitrust regulator, also blocked Facebook’s partnership with Cielo, citing the market dominance of the two “which can guarantee significant market power upon its entry.”

WhatsApp is testing Pay in India & Mexico

In another development, Facebook is working on WhatsApp-based payments service in India for almost two years. However, the social media giant yet to receive regulatory go ahead. Facebook is also testing such services in Mexico, WhatsApp’s third-largest market.

Tuesday’s announcement is the latest setback for Facebook to enter into the payments market. The company, however, is also pushing for the launch of its digital currency Libra. However, the stiff resistance of global regulators has made the launch uncertain.

Related article: Calibra CEO: Facebook Libra is not a threat to central banks

At the time of writing, it’s unclear whether WhatsApp, Mastercard, and Visa have already complied with the central bank’s notice. If they do not comply with the order, they would be subject to fines and administrative sanctions, the statement said.

What do you think about Brazil’s central bank suspending Whatsapp payment service? Let us know in the comments below.

Share Your Opinion, Write a Comment