After nearly a full year of waiting, WhatsApp payments have been cleared by Brazil’s central bank to go live, enabling peer-to-peer (P2P) payments capabilities for its 120 million Brazilian users, 86 percent of whom claim to use the app every day. WhatsApp was shut down in June of 2020 after its public launch when the Central Bank of Brazil raised concerns over the launch of WhatsApp payments and the potential implication to banks and local Brazilian payments schemes. Seeking to “preserve an adequate competitive environment,” regulators forced WhatsApp to withdraw from the market and for Facebook to be regulated as a financial services company operating in the country. Over the last year, Facebook set up Facebook Pagamentos do Brasil, a regulated entity in Brazil.
Ruben Salazar, global head of Visa Direct, told Karen Webster that the relaunch of WhatsApp Pay in Brazil for P2P transactions is an important step in offering payments choice to that country’s consumers. Salazar remarked that the real competitor in the country isn’t so much another payments scheme but cash. Visa Direct powers WhatsApp Pay in Brazil.
“What the government and the private sector are doing collectively is to create consumer choice — which is necessary for a market to evolve,” Salazar said. “If we only offer one choice, there is no freedom for the consumer to really choose what is best or better, based on their own personal economics.”
Alleviating The Bigger Pain Point
Brazil’s real payments friction is cash. Until Pix — the central bank’s instant payments scheme and WhatsApp P2P, the options for doing even relatively simple things like splitting up the dinner check were all done in cash or checks. P2P push payments via WhatsApp running over Visa Direct’s rails, Salazar noted, is a secure and straightforward way to alleviate that pain point and allow funds to flow between parties.
The move from cash to digital P2P is a big leap of faith for many Brazilian consumers, who are accustomed to the certainty and, in their minds, the security of using cash to pay people and merchants. Salazar said 89 percent of consumers living in Brazil report real concerns about entering their payment credentials into any platform for fear they will be compromised. Salazar said the security guarantee Visa offers as part of powering WhatsApp Pay in Brazil means that “fully transactional P2P” feels safe to WhatsApp’s consumer base in the nation. He believes that it will serve as an important foundation to unlocking and more payments capabilities within WhatsApp over time.
Salazar said the P2P opportunity remains massive and multifaceted in Brazil, particularly when considering the potential inherent in cross-border P2P transactions. He noted that Brazil presents a huge opportunity to digitize those flows that are part of the broader $700 billion annual cross-border payments opportunity.
WhatsApp Pay for P2P payments is just the starting point, with payments volume, Salazar said, building even in the early days of the relaunch. The next step is to enable WhatsApp Pay for merchants, which the regulators have not yet cleared, but he hopes is imminent.
“We have ongoing conversations with [the regulators] currently and continue to provide all the information they request and as does Facebook,” Salazar explained. “I think hopefully it will only be a matter of time for a decision to be taken regarding how they see us operating in that environment as well.”
The Global Opportunity
WhatsApp in Brazil is part of Visa’s overall strategy in powering digital payments throughout Latin America.
Salazar said that Visa is on the verge of launching a new P2P initiative with eight banks in Columbia, wholly separate from its efforts in Brazil with Facebook. It also has programs successfully underway in Peru — and is working on several P2P initiatives in the Caribbean and Central America. Salazar said that these efforts are starting to get some traction — P2P transactions in the region are growing by 75 percent a year on the Visa network.
For Visa, Salazar said, these efforts are an important step in not just displacing cash but making the movement of money friction-free and completely secure between parties — consumer to consumer or consumer to business.
“This is the cornerstone of every single effort we’re making right now,” Salazar said. “It’s not just about payments, it is supporting new ideas for making money move securely wherever, whenever.”