Thursday, December 8, 2022

WhatsApp payment service in Brazil suspended after one week

WhatsApp payment service in Brazil suspended after one week

On June 15, 2020, WhatsApp launched digital payment in Brazil- the second largest market for the messaging app. A month prior to its launch, WhatsApp started a small test of the service. Unfortunately, Brazilians did not have plenty of time to enjoy the service as it was shut down a week after it has been launched. On June 23, the Brazilian Central Bank and antitrust regulator Cade, suspended the instant messaging App’s mobile payments service. The Central bank claims that the decision comes after serious concerns about implementing this new service without a regulatory framework in place.

According to Currency.com, WhatsApp started operations in Brazil in partnership with Fintech Nubank, state-controlled lender Banco do Brazil SA, Visa, Mastercard, and lender Sicredi. However, the bank asked MasterCard and Visa payment partners for WhatsApp in Brazil to suspend money transfers via the app, otherwise, they may have to pay penalties or face sanctions. Furthermore, Cade blocked the payment service app partnership with credit and debit card operator Cielo. Mastercard announced that it would comply with the Central bank’s decision to develop an innovative payment environment.

This demand comes to “preserve an adequate competitive environment, that ensures the functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap,” said the Central bank in a statement published on its website.

The Instant messaging App payment system in Brazil was launched after two years of testing in various emerging markets such as India and Mexico. Payments over WhatsApp were free for individuals, whether sending to friends on the app or to pay a business for goods and services. However, Facebook will charge business owners with 3.99% as a processing fee.

WhatsApp was surprised by the decision of Brazilian authorities and claim they were in regular contact in the run-up to the launch of the payments, according to Bloomberg. “Our goal is to provide digital payments to all WhatsApp users in Brazil and we will continue to work with local partners and the Central Bank to make this possible,” said a WhatsApp Spokesperson to Bloomberg.However, Brazil’s central bank avowed that the suspension would help to evaluate any possible impacts on the country’s system of payments. It is also crucial to detect whether the payment system meets the requirements or not.