The Brazil central bank has moved to suspend the new payment system to ensure competition in the payment system industry. The financial watchdog will use the suspension to analyze the system’s potential risks to its payment infrastructure while checking whether WhatsApp complies with the regulations.
“The decision aims to preserve an adequate competitive environment, that ensures the functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap,” the monetary authority said in a statement on its website.
Facebook’s payments aspirations heartbreak
The suspension of WhatsApp payments by Brazil Central Bank is the second setback to Facebook’s market ambitions for payments. Although the beta version of the payment system was launched in WhatsApp’s largest market (India), Facebook still faces regulatory barricades that shut down a broader launch.
WhatsApp hopes that its payment system will be used by individuals to settle business transactions and to transfer funds between individuals. For individuals, the service would be free of cost, while businesses would be charged 3.99 percent as processing fee. In addition, the system has undergone pilot testing in both Mexico and India.
Brazil Central Bank surprises WhatsApp
In WhatsApp’s largest markets, India and Brazil, the messaging service has been identified as the leading online identity. According to Bloomberg, more than 5 million tradesmen use the WhatsApp brand. In addition, Bloomberg notes that the messaging giants were shocked by the decision of the Brazil central Bank since they were in regular contact with each other.
WhatsApp had debuted a test program for WhatsApp Pay in Brazil a month before it was launched. The primary goal of WhatsApps is to provide a digital payment system to all users of WhatsApp in Brazil using an unlocked method. The report also notes that it intends to support the instant payment system of the central bank. The payment system will be launched in Brazil by the end of the year.