Central bank banned WhatsApp payments in Brazil

Brazil’s Central Bank has suspended the WhatsApp payment feature in Brazil, Soon after the messaging service announced its launch, reports Bloomberg. The central bank said in a statement that it had taken the step to allow competition in the market for the payment sector. Bloomberg states that the bank would use the suspension to analyze possible threats to the payment system in the region, and to decide if WhatsApp complies with the regulations.

The suspension is the latest setback for Facebook’s payment ambitions in WhatsApp’s second-largest market. Despite launching in beta back in 2018 in India (WhatsApp’s biggest market), TechCrunch reports that Facebook has struggled to obtain regulatory approval for the service, preventing a wider roll-out. Facebook has missed its target by the end of last year for the service to be available nationwide. The payment service is also being tested in Mexico.

WhatsApp expected that its method of payments will be used by people to pay businesses and transfer money to each other individually. The service is free to individuals, but charges companies a processing charge of 3.99 percent. WhatsApp is often the main online presence for many small enterprises in countries such as India and Brazil. According to Bloomberg, over 5 million customers worldwide are utilizing the corporate edition of the device.

Bloomberg notes that the judgment of the Central Bank of Brazil has shocked WhatsApp as the firm has been in touch with the authority on a daily basis. A month before its launch, WhatsApp had begun a small test of the service in the region. “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,” said WhatsApp in a statement to Bloomberg. It added that it intends to support the instant payment system of the central bank, which is due to start in November.

The central bank in Brazil asked that Mastercard and Visa stop the use of the app to allow payments and transfers of money and warned against fines for non-compliance.

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