WhatsApp launches digital payments in Brazil

Oliver Butterworth
Retail Analyst
@RetailAnalysis

Date : 30 June 2020

Brazil has become the first country to enable consumers to send and receive money through the (Facebook-owned) WhatsApp messenger app. WhatsApp has over 120m users in Brazil who can now use it to send and receive money between friends and family, to make purchases or pay local businesses without leaving the app.

Payments made using Facebook Pay

The payment is made in WhatsApp, but uses the Facebook Pay payment service. This is then processed by Cielo (a trusted external partner and payment processor). Users add their credit or debit card details from supported banks and once verified the information is stored in the app for future payment and money transfers. Supporting banks currently include Banco do Brasil, Nubank and Sicredi.

Source: WhatsApp

Payments are made in the chat box, enabling users to track the status of current transactions and locate historic payments. The service is free for consumers to use (with no commission fees). Businesses, however, are required to pay a 3.99% processing fee to receive payments.

Source: WhatsApp

Source: WhatsApp

Protecting customer security

To protect users from unauthorised activity, they are required to enter a PIN or to pass biometric security on their phone (e.g. facial recognition/fingerprint scanning) each time they make a transaction. When paying SMEs (small and medium-sized enterprises), such as neighbourhood grocery stores, card details are not shared with merchants. 

WhatsApp payment supports the development of SMEs…

WhatsApp has been widely used in the informal sector in Latin America. SMEs have used it to negotiate the sale of goods, to share stock levels etc. To support this, Facebook launched its WhatsApp Business initiative, which enables SMEs to share their catalogues and inventory through the app.

The move to offer WhatsApp-based payment makes it easier for consumers to pay local/informal businesses. WhatsApp said “making payments simple can help bring more businesses into the digital economy, opening up new opportunities for growth.” (from the Financial Times).

…and supports social distancing during COVID-19

Despite Brazil’s informal sector being highly cash-driven, the effects of COVID-19 have created a greater demand for digital payment. Making payment via WhatsApp removes the necessity of face-to-face contact and exchanging cash when making transactions. This supports social distancing and helps to protect both customers and merchants during the pandemic.

Will we see a wider roll out?

Digital payment is a huge progression for WhatsApp, a business that has gained over 2.0 bn users globally. It has been testing the technology for some time, so it is encouraging it is making progress, particularly during these times.

Facebook has yet to comment on a wider roll out at this stage, but it is likely that it will focus on markets where it has already embedded Facebook Pay, such as the UK and the US.

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