Just a week after Facebook’s WhatsApp announced the launch of payment service, Brazil’s central bank has reportedly suspended this feature to ensure the competition in the payment landscape of the nation. The Central Bank also urged Visa and MasterCard to stop money transfer and payment activities through the app and warned that they would face fines for noncompliance.

According to sources familiar with the knowledge of the matter, the central bank will use the suspension to assess potential risks to the nation’s payment infrastructure and to work out whether Facebook’s WhatsApp is compliant with regulation.

As Brazil is the second biggest market for WhatsApp, the suspension of the WhatsApp payment feature is the biggest setback for Facebook. The company previously launched a beta version of the WhatsApp payment feature in India. Since then, Facebook has been struggling to gain regulatory approval for the services, preventing widespread rollout. The WhatsApp’s payment feature is also been tested in Mexico.

With the integration of payment features with WhatsApp, Facebook is enabling businesses as well as individuals to transfer money. The service would be free of cost for individuals but would charge around 3.99% processing fee for businesses. In nations like Brazil and India, WhatsApp often serves as the main online presence for small scale businesses. More than 5 million merchants across the globe use WhatsApp for business apps.

According to sources, WhatsApp was amazed by the decision of the central bank, as the company had been in contact with the authority. The company had also conducted a small test of service in the nation around a month before its launch.

As per the statement, WhatsApp’s goal is to offer digital payment to all WhatsApp users in the nation using an open model and it will continue to work with a central bank and local partners to make it possible.

Source Credit -https://www.theverge.com/2020/6/24/21301470/whatsapp-payments-brazil-suspended-central-bank-risk-regulators