After being announced by the social media company Facebook Inc.’s WhatsApp earlier this month, its planned WhatsApp messenger payment feature has been suspended in Brazil by the country’s Central Bank. Brazil is the second largest market in the world for WhatsApp after India with more than 120 million users.
The monetary authority said in a statement on its website that the aim of this decision was to “preserve an adequate competitive environment, which ensures the functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap”. Mastercard Inc. and Visa Inc were requested by the bank authorities to stop payment and money transfer activities through the new feature on WhatsApp.
However Tiago Severo Gomes, a partner at Caputo, Bastos and Serra and a specialist in fintechs and banking regulation, said that imposing a suspension without presenting further arguments is “an unusual, extraordinary move by the central bank, especially in payments arrangements and technology market”.
This decision by the central bank is a hit for Facebook since it had already made the announcement and had launched the service for its users in the country. The company had also conducted extensive testing of the new feature for more than two years now in a few of its larger markets such as in India and Mexico.
Allowing for payment through its social media platform is one of the core areas of the plans of Facebook to ultimately be able to offer e-commerce facilities on its platforms. The business version of the WhatsApp messenger app is used by more than 5 million merchants all around the world. And in many of its large markets such as in India and Brazil, this messaging service is often the only online presence that many small mom-and-pop retailers have.
“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.
“In addition, we support the Central Bank’s PIX project on digital payments and together with our partners are committed to work with the Central Bank to integrate our systems when PIX becomes available,” the spokesperson said, referring to Brazil’s proposed instant-payment system.
According to reports quoting sources with knowledge of the latest order of the Brazilian central bank, the decision had come as a surprise for the company and there was regular contact between the two parties prior to launching of the new payment service by WhatsApp.
Its decision to temporarily suspend the service will give it time to and opportunity to conduct an evaluation about all of the potential risks that can be posed by it to the system of payments currently operating in the country, Brazil’s central bank said. It added that it will also look into whether the new feature had complied with all the necessary rules.
The bank said that launching of the payment service without the approval form the regulator could generate “irreparable damage to the system, especially what concerns competition, efficiency and data privacy”. It added that fines could be imposed on Mastercard and Visa if they violate its latest suspension order.
(Source:www.bloomberg.com)
The monetary authority said in a statement on its website that the aim of this decision was to “preserve an adequate competitive environment, which ensures the functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap”. Mastercard Inc. and Visa Inc were requested by the bank authorities to stop payment and money transfer activities through the new feature on WhatsApp.
However Tiago Severo Gomes, a partner at Caputo, Bastos and Serra and a specialist in fintechs and banking regulation, said that imposing a suspension without presenting further arguments is “an unusual, extraordinary move by the central bank, especially in payments arrangements and technology market”.
This decision by the central bank is a hit for Facebook since it had already made the announcement and had launched the service for its users in the country. The company had also conducted extensive testing of the new feature for more than two years now in a few of its larger markets such as in India and Mexico.
Allowing for payment through its social media platform is one of the core areas of the plans of Facebook to ultimately be able to offer e-commerce facilities on its platforms. The business version of the WhatsApp messenger app is used by more than 5 million merchants all around the world. And in many of its large markets such as in India and Brazil, this messaging service is often the only online presence that many small mom-and-pop retailers have.
“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.
“In addition, we support the Central Bank’s PIX project on digital payments and together with our partners are committed to work with the Central Bank to integrate our systems when PIX becomes available,” the spokesperson said, referring to Brazil’s proposed instant-payment system.
According to reports quoting sources with knowledge of the latest order of the Brazilian central bank, the decision had come as a surprise for the company and there was regular contact between the two parties prior to launching of the new payment service by WhatsApp.
Its decision to temporarily suspend the service will give it time to and opportunity to conduct an evaluation about all of the potential risks that can be posed by it to the system of payments currently operating in the country, Brazil’s central bank said. It added that it will also look into whether the new feature had complied with all the necessary rules.
The bank said that launching of the payment service without the approval form the regulator could generate “irreparable damage to the system, especially what concerns competition, efficiency and data privacy”. It added that fines could be imposed on Mastercard and Visa if they violate its latest suspension order.
(Source:www.bloomberg.com)
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