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Facebook's (FB) WhatsApp Payments Service Suspended in Brazil
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Facebook’s newly-launched WhatsApp payment service in Brazil is under threat. The country’s central bank has ordered Visa (V - Free Report) and Mastercard (MA - Free Report) to shut down the project with the Facebook-owned chat app, citing concerns over its anti-competitive nature. The central bank has also raised privacy concerns regarding the service.
WhatsApp launched its mobile payments service last week in partnership with fintech Nubank, Visa, Mastercard and lender Sicredi. It was the first time that WhatsApp had been able to conduct a nation-wide rollout of its payments service in any market. (Read More: Facebook Launches WhatsApp Digital Payment in Brazil)
WhatsApp payment in Brazil depends on the Facebook Pay platform, which was unveiled in late 2019 and aims to let consumers use their saved payment account information -- either for credit/debit cards or a PayPal (PYPL - Free Report) account.
WhatsApp had hoped that its payments system could be used to pay businesses as well as transfer money to individuals. The service would be free for individuals but would charge businesses a 3.99% processing fee.
Facebook started testing WhatsApp Pay in India two years back and is yet to receive the regulatory approval to expand the service nationwide. Banco Central do Brasil's pushback is a serious blow to Facebook's ambitions in the payment space, mirroring the firm's difficulties in gaining regulatory approval in India’s vast marketplace.
Other than its largest market India, WhatsApp has been testing Pay in Mexico.
Banks in the nation have asked WhatsApp’s payment partners Mastercard and Visa in Brazil to suspend money transfer on the app. Failure to comply with the order would subject the payments companies to fines and administrative penalties.
Private banks have also been wary about opening valuable client data to tech giants such as Facebook. Some executives have also pointed to security issues as well as lack of accountability if a transaction goes wrong.
According to Folha de Sao Paulo, the company will have to appeal against the decision to The General Superintendence of Cade (Administrative Council for Economic Defense). It noted that regardless of the appeal’s outcome, the country’s court will open a case to decide if WhatsApp and its partners should have notified authorities of the payments service’s launch in advance.
In a separate setback, Cade blocked WhatsApp's partnership with credit and debit card operator Cielo to process payments. As Cielo is already Brazil's largest payment processor, a partnership with the biggest messaging service could pose market concentration risks.
WhatsApp Plans PIX Integration
The central bank is preparing to launch its own instant payments system called Pix for which it has secured partnerships with nearly 1,000 industry players. The central bank will enable peer-to-peer and business-to-business transactions in 10 seconds or less via mobile phone, Internet banking or select ATMs, beginning November 2020.
The central bank's move is the latest setback in payments for Facebook, which pared back its plans for a global payments system called Libra after meeting stiff resistance from regulators.
PIX will give more freedom to cryptocurrency exchanges that operate in Brazil and will offer more freedom to users. The entire Bitcoin ecosystem is a big winner from this initiative. Through PIX, for instance, it will be possible to transfer money from one exchange to another in real time with a QR code.
Per Bloomberg report, WhatsApp is committed to working with the central bank to integrate systems once Pix becomes available. More than 5 million merchants around the world use the business version of the app.
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Facebook's (FB) WhatsApp Payments Service Suspended in Brazil
Facebook’s newly-launched WhatsApp payment service in Brazil is under threat. The country’s central bank has ordered Visa (V - Free Report) and Mastercard (MA - Free Report) to shut down the project with the Facebook-owned chat app, citing concerns over its anti-competitive nature. The central bank has also raised privacy concerns regarding the service.
WhatsApp launched its mobile payments service last week in partnership with fintech Nubank, Visa, Mastercard and lender Sicredi. It was the first time that WhatsApp had been able to conduct a nation-wide rollout of its payments service in any market. (Read More: Facebook Launches WhatsApp Digital Payment in Brazil)
WhatsApp payment in Brazil depends on the Facebook Pay platform, which was unveiled in late 2019 and aims to let consumers use their saved payment account information -- either for credit/debit cards or a PayPal (PYPL - Free Report) account.
WhatsApp had hoped that its payments system could be used to pay businesses as well as transfer money to individuals. The service would be free for individuals but would charge businesses a 3.99% processing fee.
Facebook, Inc. Price and Consensus
Facebook, Inc. price-consensus-chart | Facebook, Inc. Quote
Banks to Assess Risk
Facebook started testing WhatsApp Pay in India two years back and is yet to receive the regulatory approval to expand the service nationwide. Banco Central do Brasil's pushback is a serious blow to Facebook's ambitions in the payment space, mirroring the firm's difficulties in gaining regulatory approval in India’s vast marketplace.
Other than its largest market India, WhatsApp has been testing Pay in Mexico.
Banks in the nation have asked WhatsApp’s payment partners Mastercard and Visa in Brazil to suspend money transfer on the app. Failure to comply with the order would subject the payments companies to fines and administrative penalties.
Private banks have also been wary about opening valuable client data to tech giants such as Facebook. Some executives have also pointed to security issues as well as lack of accountability if a transaction goes wrong.
According to Folha de Sao Paulo, the company will have to appeal against the decision to The General Superintendence of Cade (Administrative Council for Economic Defense). It noted that regardless of the appeal’s outcome, the country’s court will open a case to decide if WhatsApp and its partners should have notified authorities of the payments service’s launch in advance.
Brazil’s central bank suggested it hadn’t had the opportunity to analyze the Zacks Rank #3 (Hold) company’s WhatsApp payment service prior to its rollout. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In a separate setback, Cade blocked WhatsApp's partnership with credit and debit card operator Cielo to process payments. As Cielo is already Brazil's largest payment processor, a partnership with the biggest messaging service could pose market concentration risks.
WhatsApp Plans PIX Integration
The central bank is preparing to launch its own instant payments system called Pix for which it has secured partnerships with nearly 1,000 industry players. The central bank will enable peer-to-peer and business-to-business transactions in 10 seconds or less via mobile phone, Internet banking or select ATMs, beginning November 2020.
The central bank's move is the latest setback in payments for Facebook, which pared back its plans for a global payments system called Libra after meeting stiff resistance from regulators.
PIX will give more freedom to cryptocurrency exchanges that operate in Brazil and will offer more freedom to users. The entire Bitcoin ecosystem is a big winner from this initiative. Through PIX, for instance, it will be possible to transfer money from one exchange to another in real time with a QR code.
Per Bloomberg report, WhatsApp is committed to working with the central bank to integrate systems once Pix becomes available. More than 5 million merchants around the world use the business version of the app.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>