Brazil Suspends Newly Launched Whatsapp Pay

Brazil Suspends Newly Launched Whatsapp Pay

Brazil's central bank has suspended Facebook's WhatsApp messenger payment feature in the country, the app's second biggest market with more than 120 million users.

The central bank, however, said in a statement on Tuesday that rolling out the service without previous analysis by the monetary authority could damage the Brazilian payments system in the areas of competition, efficiency and data privacy.

The new WhatsApp feature lets users send money and buy goods via Facebook pay.

WhatsApp told The Times of India (TOI) that it is working with local banks and regulators to launch WhatsApp Pay in India.

Launched initially in Brazil with a view to expanding into other territories, the service allowed users to transfer funds between one another via WhatsApp, but was live for less than two weeks.

If Visa and Mastercard do not comply with the order, they would be subject to fines and administrative sanctions, the statement said.

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But the central bank, which regulates payment systems in Brazil, put the new feature on hold indefinitely.

A suspension without presenting further arguments is "an unusual, extraordinary move by the central bank, especially in payments arrangements and technology market", said Tiago Severo Gomes, a partner at Caputo, Bastos and Serra and a specialist in fintechs and banking regulation.

WhatsApp started its operations in Brazil in partnership with fintech Nubank, state-controlled lender Banco do Brasil SA, Visa, Mastercard and lender Sicredi. Apart from Brazil and India, WhatsApp is testing its payment services in Mexico as well.

"We are excited about the positive feedback from our users in Brazil on the launch of payments on WhatsApp last week". Shares in Cielo soared 30% on the day WhatsApp announced payments service in Brazil. She added that WhatsApp will work on integrating PIX, the Central Bank's proposed instant payment system. Some executives have also pointed to security issues as well as a lack of accountability if a transaction goes wrong.

"The partnership with WhatsApp has the potential to generate a relevant contribution to Cielo's bottom line in light of the company's now depressed profitability", Credit Suisse's analysts added.

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