The status of WhatsApp Pay in Brazil

WhatsApp and regulators have advanced in talks regarding the WhatsApp Pay service in Brazil, which is expected to launch in the coming months.

Although the company announced the service in June, regulators suspended it just eight days later. 

"WhatsApp's leadership has maintained frequent talks with the central bank officials to restore the payments functionality on WhatsApp," the company told BNamericas.

The company’s teams “have been working for two years to provide an innovative payment functionality in Brazil, in collaboration with recognized local financial entities that have demonstrated a strong commitment to meet the standards set by the central bank.”

Brazil was supposed to be the first market worldwide to receive the service which includes an in-chat payment system. But the central bank and antitrust watchdog Cade blocked the service over fair competition and privacy concerns.

Back then, the central bank was preparing to launch payment and instant transfer system PIX, together with other banking and financial players. Concerns arose that WhatsApp Pay could hinder the adoption of the new payment method.

The central bank has told BNamericas that its position on the issue remains the same as expressed by bank president Roberto Campos Neto during a presentation at the PIX launch a month ago.

Campos Neto said WhatsApp Pay would be greenlighted "soon" for peer-to-peer and later for person-to-merchant payments.

"First, it is important to make it very clear that we encourage any and all types of systems and means of payment that are competitive, within a framework, obviously, that we understand as competitive not only today, but for the future," said Campos Neto at the presentation.

He emphasized that the bank’s only concern was that payment services comply with all the approval criteria and foster competition.

CLEAR ALL

WhatsApp owner Facebook and card acquirer Cielo, partners in the service along with MasterCard and Visa, among others, said after the suspension that the agreement was not exclusive and allowed rival card acquirers to also forge deals in the system.

They also said they did not operate in the same business and had merely entered a financial services agreement, meaning the partnership would not offer risks in terms of market concentration.

João Paro Neto, president of MasterCard in Brazil, said at a press conference earlier this month that the WhatsApp payment service could be approved in the first quarter of 2021.

An approval still this year is unlikely as authorities have to deal with many other arrangements and technological issues, according to Paro Neto.

“We have held weekly meetings with [the central bank]. I understand that we are much closer to starting, we are close to D-Day,” Paro Neto told journalists.

The central bank's Campos Neto confirmed talks with WhatsApp CEO William Cathcart, who said the Brazilian compliance process for the payment system has been faster than in other countries.

WhatsApp has not provided details about launching the service in other Latin American markets, although Mexico is expected to be next. 

So far, the service is active only in India, where it launched a few weeks ago.

In Brazil, besides WhatsApp, other payment services by major technology groups could soon enter the fray. 

"In addition to WhatsApp, we are talking to Google and other big techs. They have this intention to be in Brazil, which is a very broad consumer market. They understand that there is an opportunity in digitization," Campos Neto said.

ELECTRONIC PAYMENTS

Online purchases with credit, debit or prepaid cards amounted to 307bn reais (US$60.3bn) in the first nine months of the year, up 31.4% over the same period in 2019, according to industry association Abecs.

Contactless payments skyrocketed 478%, moving 22.7bn reais. Growth was even bigger in the third quarter, nearly 623%, moving 14.4bn reais.

Banking association Febraban said around 90bn bank transactions were carried out last year, 40bn of which through mobile devices. WhatsApp is also the most-used app in the country.

PIX

One month after launch, PIX transactions reached 83.4bn reais in value through 92.5mn operations. 

Of the total, 84% were person to person, and the rest involved payments to or among companies.

Average transaction value in January was 496 reais among individuals and 15,000 reais among companies.

In a webinar Thursday, Carlos Brandt, deputy head of the central bank’s competition and financial market division, said that transactions between companies and individuals will be the focus of PIX from now on.

However, the monetary authority postponed to March 15 the launch of "PIX Cobrança," which would allow retailers, suppliers and service providers to generate a QR codes for PIX payments.