Nearly a year after Facebook’s WhatsApp Pay was suspended by the central bank in Brazil, the social media platform has relaunched the WhatsApp payment services, Chief Executive Mark Zuckerberg said on Tuesday.
In June last year, Facebook started its chat-to-pay system in Brazil, as part of Zuckerberg’s effort to get into the payment market. But it was abruptly cut off one week after launch by the central bank.
The regulator said it was taking the decision to “preserve an adequate competitive environment” in the mobile payments space and to ensure “functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap.”
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Banks in the nation had asked Mastercard and Visa, which are among the payments partners for WhatsApp in Brazil, to suspend money transfer on the WhatsApp app, because it was seen as a potential threat to the traditional financial system.
Facebook shifted attention to India where it has been working with the government to set up the WhatsApp Pay.
Brazil is the second country where the messaging service launched money transfers. In India, WhatsApp’s biggest market with 400 million users, it got approval to start financial services in November.
The payment feature was designed in partnership with the National Payments Corporation of India (NPCI) using the Unified Payment Interface (UPI), an India-first, real-time payment system that enables transactions with over 160 supported banks, according to a statement from WhatsApp.
The instant message app explained that it is necessary to have a bank account and debit card in India to use the WhatsApp Pay feature. Although more details about the launch are yet to be given, it seems Facebook is using the Indian playbook in Brazil.
By using debit or prepaid cards numbers, WhatsApp’s 120 million users in Brazil are able to send each other up to 5,000 reais per month through the messaging service free of charge. Initially, the system will not allow each transaction to surpass 1,000 reais or more than 20 transfers per day.
The roll out of the new feature will be phased, Chief Operating Officer Matthew Idema said in an interview. Starting today, a limited and undisclosed number of users will get a payment tool in their app. With that, they will be allowed to invite new users.
Reuters reported that in addition to reviewing the proposed payments network, the central bank also requested the technology giant be labeled as financial services company in Brazil, prompting Facebook to create a new unit called Facebook Pagamentos do Brasil, which is now regulated by the central bank.
But the central bank has not yet greenlit payments with merchants, which is expected to be a paid service, adding a new line of revenue for WhatsApp. Last year, card payments in Brazil totaled 2 trillion reais ($368.12 billion), up 8.2% from 2019.
Idema said talks with the central bank are still ongoing and Facebook expects the launch of merchant payments to occur this year, declining to comment on whether it will be a paid service.
“For WhatsApp launching payments is interesting because it increases the app usage,” the COO said.
WhatsApp started its payment service in partnership with card networks Visa Inc and Mastercard and payments processor Cielo SA. It will operate with cards issued by Banco do Brasil SA, Banco Inter, Banco Bradesco SA, Itau Unibanco Holding SA, fintech Nubank, MercadoLibre’s MercadoPago and Sicredi.
A combination of India and Brazil WhatsApp users will mean a huge market for Facebook, whose attempt in the past to develop Libra, a single global digital currency, was quashed by the U.S. government.