The bank said the decision was to “preserve an adequate competitive environment that ensures the functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap,” Bloomberg reported.
The WhatsApp payment feature was introduced by parent company Facebook earlier this year in Brazil. The Central Bank’s decision is a setback for the social media giant. The WhatsApp payment feature, tested for the past several years in markets like India and Mexico, is a central function of its plan to offer commerce options within the app.
But Brazil’s suspension of the feature will let the Central Bank evaluate the possible risk to the country’s banking system, including potential threats to “competition, efficiency and data privacy,” the bank said, according to Bloomberg.
In a statement, a WhatsApp spokesperson said the company’s goal is “to provide digital payments to all WhatsApp users in Brazil using an open model.”
”In addition, we support the Central Bank’s PIX project on digital payments and together with our partners are committed to work with the Central Bank to integrate our systems when PIX becomes available,” the spokesperson said.
Over 5 million merchants worldwide use a business version of WhatsApp’s Messenger app. Many small businesses in Brazil and India utilize the app as the primary means of establishing an online presence.
Tiago Severo Gomes, a partner at Caputo, Bastos and Serra and a specialist in FinTechs and banking regulation, said the Central Bank’s order, since there was no further argument, was an unusual move in the field of payments.
Mastercard only recently partnered with WhatsApp in Brazil this month, and customers making payments with Brazilian banks Nubank and Sicredi would have been the first allowed to utilize WhatsApp.