Brazil Blocks Newly-Launched WhatsApp Payments Service

The central bank even warned Visa and Mastercard to abstain from providing services for such payments.

The Brazilian central bank has suspended WhatsApp’s payments service within the messaging platform, in merely a week of its rollout.

According to Tuesday’s statement by the central bank, it is concerned about an “adequate competitive environment” in the Brazilian mobile payments market with the entrance of a giant like Facebook.

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Notably, Brazil is the second-largest market for WhatsApp, following India.

The central bank also highlighted that it did not have the opportunity to analyze WhatsApp’s mobile payments system and now wants to assure if the service is “interoperable, fast, secure, transparent, open and inexpensive.”

The Central Bank of Brazil has also ordered Visa and Mastercard to immediately suspend services from processing payments on WhatsApp, else they might face heavy fines and even administrative sanctions.

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Facebook’s bad luck with payments

Facebook rolled out WhatsApp payments service in Brazil on June 16 to over 120 million Brazilian users.

WhatsApp’s payments services supported Visa and Mastercard cards from three banks – Banco do Brasil, Nubank, and Sicredi – and transactions were processed via Brazil-based payments processor Cielo.

Explaining the payments service, Facebook co-founder and CEO Mark Zuckerburg even said that sending and receiving money is “as easy as sharing photos.”

The Administrative Council for Economic Defense (CADE), Brazil’s antitrust regulator, also blocked Facebook’s partnership with Cielo, citing the market dominance of the two “which can guarantee significant market power upon its entry.”

Meanwhile, Facebook is also working on WhatsApp-based payments service in India for almost two years, but is still in line to receive regulatory go ahead. The social media giant is also testing such services in Mexico, WhatsApp’s third-largest market.

This turned out to be the latest blow to Facebook to enter into the payments market. The company is also pushing for the launch of its digital currency, but the global regulatory backlash has made the launch uncertain.

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