Meta, parent company of Facebook and WhatsApp, is working on the deployment of a payment solution in Brazil via the WhatsApp messaging application, which should enable individuals to pay for purchases in shops using their smartphone. But the project is encountering resistance from local payment players and the Brazilian regulator.
A payment service via the WhatsApp application
With its 212 million inhabitants, Brazil, South America's largest and most populous country, represents a sizeable market for Meta, the parent company of Facebook, WhatsApp and Instagram.
The group, which is struggling to develop its financial services, is planning to set up a payment solution via the WhatsApp messaging application in Brazil. This future service will enable individuals to pay merchants using their smartphone.
The launch, initially scheduled for the end of 2021 according to the Financial Times, is not yet on the agenda, however. Indeed, Meta is encountering several difficulties, whether with the Brazilian regulator or potential local partners.
These partners are local payment acquirers, i.e. companies that process electronic payments and act as a link with merchants, and without whom Meta's service would not be possible. They include Getnet, Rede and Cielo.
Meta's potential partners in Brazil are opposed to the project not only because of the commissions, which they consider too low, but also, according to the Financial Times, because of a possible transfer of legal responsibilities, which they believe fall to Meta.
Regulators' reservations about Gafam
What's more, the Brazilian regulator is keeping a very close eye on the progress of this payment solution. Its reservations are shared by all regulators, who take a dim view of the tech giants' ambitions in financial services.
It has to be said that Meta's lack of transparency regarding the use of users' personal data is not reassuring for regulators, who are concerned about the use of payment data.
Meta's cryptocurrency project, announced in 2019, had to be abandoned and sold back to US bank Silverbank Capital Corporation for $182 million, under pressure from regulators, and in particular the Fed, the US regulator.
The small business loan program deployed by Facebook in India last year also suffered several setbacks.
The fact remains that, while the Gafams are encountering difficulties in bringing their financial services projects to fruition, often coming up against compliance and regulatory issues, their ambitions are not waning, and new projects will continue to emerge.