Brazil’s Central Bank has suspended the new WhatsApp Payments service, according to a report by Reuters. WhatsApp Payments was launched only last week after a long trial of WhatsApp Pay in India. Both Visa and Mastercard have been warned to stop working with WhatsApp. But why?
The Brazilian Central Bank is worried that WhatsApp didn’t consider the impact of the new payments system on the country’s monetary policy before launching. Some of the issues raised relate to privacy and efficiency of service and.
As WhatsApp is working with Cielo, Brazil’s largest card operator, questions have been raised over market domination. The central bank worries it could stifle competition.
To side-step the competition problem, WhatsApp has said it will open its platform to all players in the fintech space. WhatsApp Payments is only an intermediary between WhatsApp users and the financial institutions. Removing any barrier to entry could make it possible for more fintech players into the fray.
WhatsApp Pay has suffered a similar fate in India where it has been embroiled in a series of regulatory issues. Outside of WhatsApp, Facebook’s Libra project is also facing resistance due to perceived impact on national monetary policies.