This archive report was first published on 24 June 2020.
On June 24, 2020, Brazil's central bank effectively suspended WhatsApp's newly-launched payments system, which allowed users to send money via chats. The central bank ordered Visa and Mastercard to halt payments and transfers via the system, citing concerns over market concentration, efficiency, and data privacy.
WhatsApp, which has over 120 million users in Brazil, launched the service last week in a nationwide rollout. The system allowed users to transfer funds to individuals or local businesses within a chat, attaching payments as they would a photo or video.
According to the central bank, rolling out the service without previous analysis by the monetary authority could damage the Brazilian payments system. The central bank's move is the latest setback in payments for Facebook, which pared back its plans for a global payments system called Libra after meeting stiff resistance from regulators.
WhatsApp has stated that it will continue working with local partners and the central bank to provide digital payments for its users in Brazil. The company plans to use a business model open to more participants, which would address regulators' concerns on market concentration.
Earlier on Tuesday, the central bank issued a regulation saying it could require market participants to receive previous approval to operate in payments. WhatsApp launched its Brazil services without requesting central bank authorization, as it was operating as an intermediary between consumers and financial institutions.
Some observers have called the regulator's decision an overreaction, while others said WhatsApp presented a potential risk in terms of market concentration and privacy. The central bank's move comes as the regulator prepared to launch its own instant payments system, called Pix, in November 2020.
