By working with Visa and Mastercard, WhatsApp, the Facebook-owned chat messaging service, hopes to smooth out the issues with the bank. Will Cathcart, head of WhatsApp, said the central bank “made clear that they support platforms like WhatsApp that are innovating in digital payments,” Reuters reported.
Brazil’s central bank and antitrust watchdog shut down WhatsApp’s payment services partnership with Visa, Mastercard and Cielo, citing concerns about competition, efficiency and data privacy. Cielo is the largest acquirer in Brazil, with a 41 percent market share.
Cielo, being the only card acquirer in a deal with WhatsApp, is under scrutiny by watchdog Cade for any signs that this could lead to issues of favoring it over other companies in the future, Reuters reported. Cade said WhatsApp could boost Cielo card transactions by 10 percent, just estimating conservatively. Upon the announcement by the central bank, Cielo’s shares plunged 10 percent.
Brazil is the first country in which WhatsApp has launched its nationwide payment service, and the messaging service has over 120 million users in the country, which is the second largest market behind India, Reuters reported.
After the decision to freeze the payments on Wednesday (June 24), PYMNTS reported on the proactive nature of the decision, in which the bank froze payments before anything even happened with the service to begin with. PYMNTS wrote about the contrast between the bank’s response and how the popular app had been received by users and businesses, judging by the number of users WhatsApp regularly boasts.
WhatsApp said in a blog post last week that the payment function would aim to boost up Brazil’s community of micro-sized and small businesses, often considered the “heartbeat” of the community.
Selected by Fintech Tube