There’s no sign of a let-up in tech mogul Mark Zuckerberg’s push into payments. Facebook announced today that its WhatsApp messenger service has started offering in-app digital payments for users in Brazil.
The south American country, where WhatsApp has 120 million users, is the social media app’s second largest market.
“People [in Brazil] will be able to send money securely or make a purchase from a local business without leaving their chat,” WhatsApp said in a blog.
Facebook, which owns WhatsApp and two other messenger services, Instagram and Messenger, is taking a multi-pronged approach to expanding its payments business, which offers the firm a chance to move away from the ad-driven business model that has proved so controversial in the past.
In June last year the firm announced ambitious plans for a new global digital currency called Libra.
However, in April this year, Facebook downgraded this goal, saying it was henceforth focusing on a range of individual currency ‘stablecoins’, rather than on developing a single global means of payment.
In parallel with its plans for Libra, in November 2019 Facebook said it was launching a new service called Facebook Pay, initially available to the company’s US-based users of Facebook Messenger.
“Over time, we plan to bring Facebook Pay to more people and places, including for use across Instagram and WhatsApp,” Facebook’s vice-president of marketplace and commerce, Deborah Liu, said at the time.
It is Facebook Pay that will underlie the new WhatsApp payment service in Brazil, the firm says.
Earlier in 2019 Facebook’s CEO, Mark Zuckerberg, said he planned to integrate Messenger, Instagram and WhatsApp, which have an estimated 2.6bn users worldwide.
Facebook says its new Brazilian service will run on the established Visa and Mastercard payment ‘rails’, though the firm insists it is building an open model to welcome more partners in the future.
Indian regulators have prevented the trial being extended to all 400m users
The tech giant’s switch to Brazil comes after it received a rebuff to its payment plans in India, WhatsApp’s largest market. Facebook had been trialling a WhatsApp-based payments service in India since early in 2019.
During the trial, around 1 million Indian users of WhatsApp were able to pay each other directly via the app, after having linked their Indian bank account to their WhatsApp account.
This offered Facebook and WhatsApp a way to avoid the use of third-party services like Visa and Mastercard.
Rather than using these credit card rails, payments between Indian WhatsApp users’ bank accounts passed directly from bank account to bank account by means of India’s Unified Payments Interface (UPI), which offers a near-instantaneous settlement of transactions.
However, Indian regulators have so far prevented the trial being extended to all 400m Indian users of WhatsApp.
In November 2019 the Times of India reported that the Reserve Bank of India (RBI), the country’s central bank, had decided not to allow the full-scale launch of a payments business in India by Facebook because of the firm’s non-compliance with a requirement to store data locally.
In Brazil, the new WhatsApp-based payments service will come at a cost to businesses, though not to individuals.
While sending money or making a purchase on WhatsApp will be free for people, businesses will pay a processing fee to receive customer payments, the firm says. WhatsApp says this fee will be similar to what businesses may already pay when accepting a credit card transaction.
Update, June 24: Brazil’s central bank suspended Facebook’s WhatsApp-based payments service a week after launch, citing the need 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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