Brazil’s Central Bank suspends WhatsApp Pay

Brazil’s Central Bank has suspended WhatsApp payments in the country. A report unveiled this news on June 24, noting that the central bank instructed Mastercard and Visa to stop processing money transfers on behalf of Facebook-owned WhatsApp. Per the publication, this move comes less than a month after Facebook rolled out the payment system in the country.

According to the report, the Central Bank of Brazil (BC) took this measure to purportedly help maintain an adequate competitive environment. BC added that this suspension would provide it with ample time to assess the risks that the firm poses to Brazil’s existing financial sector. Per BC, this move will help ensure the functioning of an interoperable, fast, secure, transparent, open, and cheap payment system.

Commenting on why it was necessary to suspend WhatsApp Pay, the central bank noted that starting the service without the regulator’s go-ahead could cause, “irreparable damage to the system, especially what concerns competition, efficiency and data privacy.”

The publication further cited that Visa and Mastercard will face heavy fines and administrative sanctions should they fail to follow this directive.

WhatsApp aims to integrate PIX

While the Central Bank of Brazil has suspended WhatsApp Pay, the monetary authority unveiled that it will likely integrate the payment system into PIX, BC’s upcoming blockchain-like digital payments system.

In an interview, a WhatsApp spokesperson said,

“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. 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.”

A major setback for Facebook

BC’s decision to suspend WhatsApp payments has set Facebook a few steps back. Facebook rolled out the payment system in the country earlier this month after trialing it for over two years in various markets including India and Mexico. Reportedly, Brazil was WhatsApp Pay’s second-largest market with more than 120 million users. By stopping these payments, Brazil’s central bank has hindered WhatsApp’s long-term goal of offering commerce within the application.

Do you think WhatsApp Pay’s suspension in Brazil will affect Facebook’s plans of rolling out Libra? Share your thoughts in the comment section below.