The Brazilian central bank has suspended payments on WhatsApp with immediate effect, ordering payment companies Visa and Mastercard to freeze payments and transfers through the network.
In an announcement, Banco Central do Brasil (BCB) said the system was not analyzed by monetary authorities in advance, and posed risks to the wider payment system in Brazil, including in areas of privacy, competition and efficiency.
The ban comes just a week after WhatsApp rolled out the payment system, which allows users to send money via WhatsApp chats.
The central bank slap down is the latest blow for Facebook, which owns WhatsApp. The company’s Libra stablecoin has also been beset with problems with regulators and central banks, resulting in a delay in the rollout of the digital currency.
Brazil is WhatsApp’s second market by user numbers, behind India. Attempts to roll out payments in India have also met with opposition from local regulators.
A spokesperson for WhatsApp said the company would continue to work with the central bank and other “local partners” to roll out the technology.
Carlos Daltozo, co-head of equities at Eleven Financial, described the decision of the central bank to suspend WhatsApp payments as “a bit odd.”
“It is a bit odd that the central bank decided to suspend WhatsApp as the regulator is already able to oversee all market participants which joined WhatsApp. Besides that, WhatsApp is open to form new partnerships,” Daltozo said, according to Reuters.
A source from an institution which had partnered with WhatsApp in Brazil said the regulatory picture was complicated by the central bank attempting to protect its own payment systems, in competition to WhatsApp’s model.
Mastercard said it would comply with the order from the central bank, and would continue to work with firms to develop innovative payment systems. Both Facebook and Visa declined to comment.
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