WhatsApp person-to-person payments return to Brazil

WhatsApp has relaunched a feature in Brazil allowing users to send each other money after an initial attempt was blocked by regulators and is now pushing to launch business payments in the market as well.

The Facebook-owned messaging app said on Tuesday that it would bring back person-to-person transfers free of charge in the South American nation, its second-largest market with 120m users, as it pursues plans to introduce payments for businesses in the country. 

Latin America’s biggest economy initially hosted WhatsApp’s first nationwide rollout of P2P payments last June. However, the service was halted abruptly a week after it debuted when Brazil’s central bank told Visa and Mastercard to stop processing payments through the app, citing concerns about competition, efficiency and data privacy.

The country’s antitrust regulator also suspended WhatsApp’s partnership with Cielo, a transaction processor, over market concentration concerns. 

At the time, WhatsApp said it believed officials were anxious that the service might compete with Pix, the central bank’s own instant payments service that is free-to-use for individuals and was introduced later in the year.

The relaunch comes after Brazil’s central bank recently granted a licence for P2P payments to a local Facebook subsidiary for the purposes of the WhatsApp scheme. It will now include eight banks, including the country’s largest private sector lender, Itaú, compared to just three the first time round. 

Upon relaunch, the P2P payment service will be initially available in the cities of Rio de Janeiro and São Paulo, for people with debit, prepaid or combo cards — which combine debit and credit functions — from one of eight banks under the Visa and Mastercard banners, but not credit cards. 

“This is part of our mission to empower everyone to send money as easily as sending a message and to gain access to the world’s financial system in the digital economy,” said Matt Idema, WhatsApp’s chief operating officer. 

In what would be a first for the tech company, it said it also was in talks with Brazil’s central bank about extending the service to enable money transfers to businesses. The move comes as WhatsApp has increased its efforts to introduce more online shopping to its apps during the coronavirus pandemic. 

Facilitating ecommerce would allow the platform to tap fresh revenue streams and gather data to increase the value of its existing advertising, Mark Zuckerberg, Facebook chief executive, has said. However, the push into ecommerce has already heightened privacy concerns at WhatsApp, after the app introduced new terms of service clarifying that it would share more data with its parent company, spooking many of its users.

Late last year WhatsApp won approval for the first full rollout of its payments service throughout India, its largest market, following extended delays. WhatsApp is also pushing to launch the service in Mexico and Indonesia.

The Silicon Valley brand’s second stab at payments in Brazil, where mainstream banks have traditionally charged fees for money transfers and current accounts, coincides with increased competition from fintechs offering lower-cost or free digital services.

Operated by Cielo, the feature will be enabled through Facebook Pay, a similar service on the social media platform. A Brazilian phone number is required and only transactions within the country and in local currency are allowed. A person can send up to R$1,000 ($183) per transfer and receive 20 transactions in a day, with a cap of R$5,000 each month. 

“Seventy per cent of Brazilians who have a bank account will be able to use [our] service and we’ll be adding more banks in the future,” Idema said.