WhatsApp pay was introduced in Brazil earlier this month. The payments service was first initially beta tested in India and released in Brazil to its 120 million users who became the first to use its services. However, WhatsApp pay has been banned by Brazil’s Central Bank. The ban has been imposed, just within a week of its launch in the country. The Bank’s decision aims to “preserve an adequate competitive environment, that ensures the functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap.” The Central Bank plans to evaluate WhatsApp’s payment services during the ban to ensure that the same does not pose a risk to the country’s payment system, especially in terms of competition, efficiency and data privacy. The service was started without the regulator’s green light and the ban would also provide an opportunity to check whether the payment system meets the necessary compliances. The Central Bank has also requested Mastercard and Visa to stop payment and money transfer activities through the app. Brazil’s anti-trust regulator, known as Cade, also suspended WhatsApp’s partnership with electronic payment company Cielo. The regulator believes that Cielo’s high market share in payments coupled with WhatsApp’s user database could create a barrier for any new competitors. Coincidently, when Brazil’s anti-trust regulator raised these questions, the Indian ani-trust regulator, Competition Commission of India, cleared Facebook’s $5.7 Billion investment in Reliance Jio Platform. The decision of Brazil’s Central Bank and its anti-trust regulator is a major setback for WhatsApp Pay, which has been testing its services for the past two years. Although, WhatsApp remains committed to launch payment services in India, where it has around 400 million users, it remains to be seen how the Indian regulators would react to the Brazilian ban. Irrespective of the ban, payments integration is a fundamental element for WhatsApp to globally replicate the regional success of its rival WeChat. Further, without replicating WeChat’s success globally, Facebook’s $21 Billion acquisition of WhatsApp remains questionable. Moreover, it appears that whenever Facebook installs a new payment feature, it is entailed with regulatory scrutiny. This is mainly because Facebook controls a major data monopoly. Libra, Facebook’s cryptocurrency is also at verge of its launch and the Brazilian ban is likely to impact sentiments around libra. Facebook has been carefully choosing jurisdiction for its payment services. The data protection regime in Brazil, just like India, remains uncertain as the articles which entail administrative sanctions on violations of the General Data Protection Law have been notified to take effect in August 2021, giving time to payment aggregators such as WhatsApp pay to further increase their userbase.
In collaboration with Mayank Takawane.
Comments