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Brazil suspension of WhatsApp Pay proof of ‘BigTech infiltration’

By Sunniva Kolostyak

June 26, 2020

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Brazil’s central bank has suspended WhatsApp’s a newly-launched system allowing users of the messaging service to send money via chats as it could damage the country’s payments system.

Banco Central do Brasil said in a statement that the service could damage the Brazilian payments system in the areas of competition, efficiency and data privacy, and ordered Visa and MasterCard to halt payments and transfers made through WhatsApp Pay.

Just over a week ago, WhatsApp rolled out digital payments to WhatsApp users in Brazil via WhatApp Pay, enabling users to send money or make purchases from local businesses through the chat function.

The popular Facebook-owned messaging app then said that over 10 million micro and small businesses in Brazil will be able to benefit from the solution. Enabled by Facebook Pay, the company noted that it aims to enable people and businesses to use the same card information across all of Facebook’s apps.

WhatsApp Pay
Facebook’s now-shelved WhatsApp Pay

Ivo Gueorguiev, Co-Founder and Executive Chairman, Paynetics, explained that the recent events are a clear example of how BigTech is infiltrating the financial services industry.

“It seems like an obvious move for tech behemoths such as Apple, Facebook, Google and Rakuten, as they command enormous resources and have billions of clients, but their offerings can be unsuited to the complexities of the sector.”

He noted that the interesting result of BigTech making a finance play is how it is a catalyst for closer collaboration between FintTechs and established players in the industry.

“This way they can bring ‘best in breed’ solutions to market which can compete with the tech giants, but which will have the adequate regulatory and supervisory frameworks in place in order to make them successful, and drive innovation in the sector to boot.

“Taking a further step back to look at the industry as a whole, what is really needed here is a new breed of “regulated FinTechs”, to bridge the gap between runaway, disruptive ideas and down to earth, complex, regulatory frameworks. No one can compete against BigTech alone, and so successful responses to their market ambitions require full-blown cooperation.”

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