Brazil tells Visa, Mastercard to stop transactions for WhatsApp payments system

Just last week, we were telling you about the somewhat surprising decision of WhatsApp to launch its payments system in Brazil first since they have been beta testing it in India. But now it looks like the issues they were having in India may be happening in Brazil also. The central bank of the South American country has ordered Visa and MasterCard to stop all the payments and transactions that the system was already enacted in the country, leaving users confused and Facebook scrambling.

WhatsApp rolled out the payment system last week which let users to transfer funds, make payments, and transact with businesses from within the app itself. They partnered with local banks in Brazil like Banco de Brasil, Nuband, and Sicredi, with Visa and MasterCard as well, and with payments processor Cielo working on completing the transactions. Brazil is WhatsApp’s second largest market next to India and so they launched it here first as they were still having problems with local banks in India.

But now the central bank of Brazil is basically ordering the stoppage of these WhatsApp transactions. According to Reuters, they are saying that without previous analysis by the monetary authority, having this kind of service might cause damage to the Brazilian payment system. If both Visa and MasterCard do not comply, they will receive administrative sanctions and also fines from the regulatory body.

For its part, WhatsApp did not seek central bank authorization before launching the payment system since it was just acting as an intermediary between consumers and financial insinuations. But the central bank doesn’t see it as that and even before they ordered the suspension, they issued a regulation that they will be requiring market participants to get approval before they go into payments.

Some are saying that this move is “suspicious” as the central bank is preparing to launch its own instant payments system in November. The system is called Pix and they reportedly already have 90 participants. A spokesperson for WhatsApp said they are working with the central bank to integrate their own systems as well.