WhatsApp Payments, stuck in regulatory hurdles in India, goes live in Brazil

WhatsApp has launched digital payments on its application in Brazil while its payment service in India remains stuck in a regulatory and legal quagmire.

“We’re excited to announce that starting today we’re bringing digital payments to WhatsApp users in Brazil. People will be able to send money securely or make a purchase from a local business without leaving their chat,” said the Facebook-owned messaging service in a blog post on June 15.

In Brazil, the company is leveraging Facebook Pay for its payments service. WhatsApp has over 120 million monthly active users in Brazil who use the application to chat with their local businesses. Now, they can complete the transaction by making payment in the same window itself.

The company said that it would have a six-digit pin or a fingerprint authorisation system to enable transactions with second factor authentication in the country mainly to prevent fraud. It is currently working with Banco do Brasil, Nubank, and Sicredi to support debit and credit card transactions through the Visa and Mastercard network.

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As obvious from these details WhatsApp Payments has been launched in a very different format in Brazil, it is actually operating as an extension of Facebook Pay, a card-based payment service that has been live in the United States for quite some time. In India WhatsApp was trying to leverage the Unified Payments Interface (UPI) system for transactions. The National Payments Corporation of India run UPI allows instant payments through third party apps between linked bank accounts.

While it is operating within a limited set of users in India, multiple regulatory challenges and litigation issues have delayed its full launch.

Moneycontrol wrote on May 5 that WhatsApp was set to submit its detailed data localisation plans by the end of the month and go live with the product with three large banks. But, this did not happen.

Sources have confirmed there could be a further delay since the Supreme Court of India is looking into a public interest litigation that has been filed alleging that the Facebook owned company should be banned from payments here.

The beta testing of the product had started back in 2018 with only a limited set of users. With more than 400 million monthly active users here, India was supposed to emerge as a key market for payments for the Menlo Park headquartered company, but that was not to be. While the first major hurdle was data localisation the second was legal challenges around privacy and data protection concerns raised by activists.

There was even a public interest litigation that was filed by a Delhi based policy think tank G2 Chambers against payments service going live on WhatsApp. Replying to the PIL, WhatsApp however, said that this was no time for any ‘busy body’ like G2 Chambers to throw in a spanner while they are on track to go live with payments in India under close scrutiny of the Reserve Bank of India and NPCI.

Besides these, Facebook was also under tremendous scrutiny of the government because of privacy concerns raised globally against the company. There was also a tussle between the central government here and WhatsApp on the issue of encryption of messages on the platform, arising out of the need to regulate the spread of fake news on WhatsApp. Through 2019 and a good part of 2020, all these issues have caused a massive setback for payments offering to go live in India.