The plan will allow users to pay businesses using messaging apps in Brazil was shattered by clashes with potential partners
Meta’s long-anticipated plan to allow customers to transfer money to businesses through WhatsApp’s messaging app in Brazil has been shattered by a series of disputes with potential payment partners, which is the latest setback to the tech giant’s e-commerce ambitions span across the globe.
WhatsApp had planned to introduce a payments-to-merchant (p2m) functionality in the world’s largest nation in late 2013, according to several people familiar with the development, which would be the first of its kind for encrypted messaging application.
But, WhatsApp has so far been unable to get locally “merchant acquirers” — businesses that handle electronic payments and are required to establish and manage the service. It is still waiting for approval by the central bank in the country. It is the second-largest market with 120 million users.
The challenges with launching this initiative are another setback for Meta’s move towards financial service.
This Brazilian movie was planned as a trial platform to encourage more e-commerce through its platforms worldwide. The move comes when the social media giant is looking for new revenue streams to supplement its existing ones as it decreases for its core products like Facebook and Instagram -which could threaten its $118 billion annual ad-based business model.
Discussions between Meta and the payment groups are stalled on several issues, including the proposed fees for WhatsApp that the acquirers thought were not enough, according to sources familiar with the talks.
Merchants who purchased from Meta also felt that the terms drafted by Meta were burdensome and expressed concerns about the possibility that the Silicon Valley group wanted to transfer certain legal obligations that are associated with this initiative, they claimed.
“The problem isn’t technical,” said a person aware of the discussion and who asked not to be identified. “It’s contractual. The infrastructure is ready.”
WhatsApp stated that it does “not consider the launch of person-to-merchant payments in Brazil to be delayed” and added: “We continue to work collaboratively with local authorities and potential partners, and don’t comment on the specifics of confidential regulatory or commercial discussions.”
Facilitating payments and eCommerce will enable Meta to generate new revenue streams and collect data that will increase the value of its current advertising, its chief of staff, Mark Zuckerberg, has said.
But, Meta’s efforts to pay for its services have been beset with difficulties. This year, the global cryptocurrency program was shut down following US officials refusing to grant Meta the green signal over the stability of its currency and competition issues.
While WhatsApp has already introduced an option that works in Brazil and India that permits cash transfers between people, known as peer-to-peer (p2p) payments, both initiatives were initially delayed due to the regulatory opposition.
A few days after WhatsApp launched p2p Brazil in the middle of 2020, the central bank shut down the service due to concerns over efficiency, competition and data security. WhatsApp launched the feature again within a year.
According to a person who knows the situation, WhatsApp requires acquirers to join before the central bank can decide whether or not to approve the service p2m. Central bank officials have requested that WhatsApp collaborate with multiple acquirers instead of just one because of competition concerns, according to another source.
The authority has also voiced concern about whether there could be a clear avenue for smaller retailers in the country to file an appeal against Meta should there be any issues regarding payments the person mentioned.
Certain people within Brazil’s payments sector think that the central bank would like to encourage the adoption of its instant-pay system, dubbed Pix, that permits transactions between transactional accounts within only a few minutes. It has gained a lot of attention since its launch in November 2020.
Brazil’s central bank stated: “The Central Bank does not comment on the progress of discussions with interested parties during authorisation processes”.
