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Will big tech be stopped in payments

Facebook must have thought its Libra digital currency project was enough for regulators to take on for now. Nope. On June 15th, WhatsApp Pay (a domestic P2P offering) launched in Brazil, Facebook’s second biggest market with 120 million users. 10 days later it was suspended by the Brazilian Central bank to “preserve an adequate competitive environment”.

The Central Bank’s move was far reaching. It has prohibited Mastercard and Visa from carrying out payments and transfers to the app, making it impossible for the system to work. Cade, Brazil’s antitrust authority additionally suspended WhatsApp’s partnership with payment processor Cielo, another market leader.

Does this move give an indication of changing regulatory winds? Payments is a massive opportunity for big tech (our analysis here) but there have yet to be any major breakthroughs. Apple’s deal with Goldman Sachs is perhaps the most developed but credit cards is a very competitive market.

Facebook (and others) have been focusing on big emerging economies with less developed payment systems and large proportions of under-banked population. WhatsApp Pay has been trialing in India since 2018 and in Mexico too. But Facebook decided to launch in Brazil first as the Reserve Bank of India hasn’t provided the regulatory approval for a country-wide roll out yet. Expect that decisions to be even more scrutinised now. And the logical extension to all these domestic P2P offerings – entering the cross-border space – will seem far off for now.

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