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Brazil’s central bank suspends WhatsApp’s payments service only a week after launch

Brazil’s central bank suspended WhatsApp’s payments service on Wednesday, only after a week it first went live in the country. The bank said that it took the decision to “preserve an adequate competitive environment”, and to ensure an “interoperable, fast, secure, transparent, open and inexpensive payment system”. Bloomberg first reported this, and pointed out that Brazil is WhatsApp’s second biggest market with over 120 million users, behind India.

“The measure will allow the Central Bank to assess possible risks for the proper functioning of the Brazilian Payment System (SPB),” the bank said. “The possible start or continuity of operations without prior analysis of the Regulator could generate irreparable damage to the SPB, notably with regard to competition, efficiency and data privacy,” it added. Visa and Mastercard have also been ordered to “immediately stop using the WhatsApp application to initiate payments and transfers”.

WhatsApp had launched its payments services in Brazil on June 15, which was enabled by Facebook Pay, and allowed users to send and receive money on by linking their WhatsApp accounts to their Visa or Mastercard debit and credit cards, and with local banks including Banco do Brasil, Nubank and Sicredi. Payments processing company, Cielo was handling the transactions.

The decision will come as a setback to Facebook, and its WhatsApp payments ambitions in particular, especially since judicial and regulatory scrutiny have already created hurdles for WhatsApp’s UPI payments service in India. A WhatsApp spokesperson, in a statement to MediaNama, said that “even as we continue to work with our local partners and the Central Bank in Brazil, we remain committed to launching WhatsApp Payments in India”.

WhatsApp Pay’s troubles in India

WhatsApp Pay, which is based on the UPI architecture developed by the National Payments Corporation of India (NPCI), was piloted over two years ago in India and is yet to see a full launch. Facebook and WhatsApp have run into hurdles around India’s data localisation mandate and the related regulatory clearances. At least two different cases have been filed in the Supreme Court against the service. WhatsApp’s UPI payments launch in India is expected to upend the existing ecosystem, as it is the go-to messaging platform, with 400 million monthly active users in the country.

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In February, WhatsApp had secured a licence to operate from the National Payments Corporation of India (NPCI), after securing the RBI’s approval. However, soon after that, an interim application in the Supreme Court challenged the NPCI and RBI’s green-lighting of the service, calling for the “unlawful trials” of the payments service to stop.

Following that, another petition in the Supreme Court, filed by think tank G2 Chambers, argued that WhatsApp “has been known to have failed to secure sensitive data of its users” and has also “failed to assume accountability and responsibility for the same”, and called for WhatsApp Pay’s trials in India to stop. In an affidavit, WhatsApp questioned the credentials and suitability of the petitioner, calling it a “busybody” that, as an “unregistered Think Tank” that was just seeking “to create new barriers for WhatsApp Pay under the guise of enforcing fundamental rights”.

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