Early this month, Facebook announced the introduction of WhatsApp payments and Brazil was the first country this feature would be rolling out in.
This move was significant as Facebook tries to capitalize on the business of sending money between people on their apps. WhatsApp for Business already has more than 5 million merchants using it.
Brazil is also an interesting country as it has 120 million WhatsApp users second to India which has 200 million users.
Brazil also has over 10 million small and micro businesses.
The payments were levy free for users either sending or receiving money. However, businesses were paying a 3.99% processing fee to receive payments.
Brazil’s central bank has now suspended WhatsApp payments.
They’ve halted payments to evaluate any possible risk to the country’s system of payments and to determine whether the payments system meets the necessary rules.
A statement from the authority reads that the decision is to “preserve an adequate competitive environment, that ensures the functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap.”
Payment firms Visa and Mastercard were also requested to stop any transactions through the popular chat app. The bank added that the companies could face fines if they didn’t comply.
This suspension has raised concerns.
Tiago Severo Gomes, a partner at Caputo, Bastos and Serra and a specialist in fintech and banking regulation said that the suspension was an unusual and extraordinary move by the bank.
Speaking to Bloomberg, a source familiar with the payments program said that they were surprised by the suspension as they were in contact with the bank before they launched their payments feature.
It will be interesting to see how things play out in Brazil regarding this decision as the country is already working out on PIX, the central banks’ proposed instant digital payment system that has secured partnerships with nearly 1,000 key industry players.
PIX is set to launch in November.
India is still testing WhatsApp Pay which began two years ago. Regulators in the country are yet to give them a go-ahead for a nationwide rollout.
Mexico is another country testing WhatsApp Pay.
It’s unknown if the three companies, WhatsApp, Visa and Mastercard have compiled with this decision.
WhatsApp will have to appeal against this decision to the Administrative Council for Economic Defence.