WhatsApp Launches Digital Payments Service

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Chat-based payments system, offered first in Brazil, allows users to send money or pay merchants without leaving chat service

Facebook has launched its long-awaited WhatsApp digital payments offering, with Brazilian users and small businesses the first to gain access to the service.

The system allows users to send money to other individuals or to make purchases from local businesses.

Facebook-owned WhatsApp noted that WhatsApp users in Brazil have grown accustomed to relying on the platform to interact with small and micro businesses.

“Now in addition to viewing a store’s catalogue, customers will be able to send payments for products as well,” the company said.

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Image credit: Facebook

Digital payments

The service can be used free of charge between individuals, with businesses paying a processing fee of 3.99 percent per transaction.

Businesses have access to additional features, such as the ability to issue refunds or access technical support.

The system uses Facebook’s own Facebook Pay, launched last year.

Payments can be set up with a linked Visa or Mastercard debit or credit card from Sicredi, Banco do Brasil or Nubank at launch, with a six-digit PIN or fingerprint required to complete the transaction.

Payments processor Cielo is handling transactions and Facebook said other financial organisations will be able to join later on.

Businesses need a Cielo account and WhatsApp Business to receive payments.

Regulation

Brazil has WhatsApp’s second-biggest user base after India, with 400 million monthly active users in India and 120 million in Brazil.

Facebook has been trialling WhatsApp payments in India for months, using India’s UPI payments system, but has not yet obtained regulatory permissions that would allow it a broad launch across the country.

While WhatsApp has become an established channel in both India and Brazil for businesses to interact with customers, neither country has a broadly established digital payments system that operates through a chat service.

In a January call with analysts, Facebook chief executive Mark Zuckerberg said the company was focusing its payment systems in different regions depending on where the company’s various apps are most widely used.

“For things like Instagram, and even a lot of what we’re doing on Facebook, it’s a lot more developed countries; for WhatsApp, it’s the biggest countries on WhatsApp”, he said.

Messaging apps

“So that’s countries like India and Mexico and Brazil and Indonesia, which will make up a large part of the community on WhatsApp.”

Last year Facebook shocked the financial world with its plan to launch the Libra cryptocurrency, which was intended as another way of offering payments via Facebook messaging apps such as Facebook Messenger or WhatsApp.

But Libra received a hostile reception from regulators around the world and plans around the cryptocurrency’s launch and development have since been scaled back.

WhatsApp alone has more than 2 billion users around the world.

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