The central bank of Brazil has suspended WhatsApp to preserve the local business environment
WhatsApp’s payments service has been suspended by the central bank of Brazil only one week after its launch.
The central bank announced that it had called for Visa and Mastercard to immediately stop their payments and transfers through WhatsApp. According to the statement of the central bank, this decision was made in order to “preserve an adequate competitive environment, which ensures the functioning of an interoperable, fast, secure, transparent, open and inexpensive payment system.”
WhatsApp’s payment feature supports Visa and Mastercard cards from Nubank, Banco do Brasil and Sicredi. The central bank said that if Visa and Mastercard do not follow the order, the companies would be subject to fines and administrative sanctions.
In addition, the Administrative Council for Economic Defense (CADE), Brazil’s national competition regulator, has blocked a partnership between WhatsApp and payments processor Cielo. The local regulator said Cielo has a high market share and WhatsApp has millions of users in Brazil. This can “guarantee significant market power upon its entry.”
This announcement from the central bank and the CADE are the latest setback Facebook, the owner of WhatsApp, which has faced intense criticism from regulators around the world for its stable coin project Libra.
A spokesperson from WhatsApp informed various media outlets that the company would continue to work with local partners as well as the central bank to make their payments services possible.
WhatsApp rolled out their payments service in Brazil earlier this month, two years after it conducted beta tests on the feature in India. This new feature was supposed to allow WhatsApp’s individual and business users to send and receive money using the app itself.
The trial of the payment system was enabled through the Unified Payments Interface (UPI), an instant real-time payment system that the National Payments Corporation of India developed.
This payments feature was enabled through Facebook Pay and transactions were processed through Cielo. Payments can be initiated with a Visa or a MasterCard. While the payments feature was free for individuals, businesses have to pay a $3.99 processing fee to receive payments.
Mark Zuckerberg, the Chief Executive Officer and founder of Facebook, previously said that this feature makes sending and receiving money as simple as sharing a picture.
Facebook Pay is currently live in many countries, such as the UK and the US. Brazil is WhatsApp’s second-largest market after India, with over 120 million users in the country.