WhatsApp picks Brazil to launch digital payments

The service is being launched with local institutions Sicredi, Banco do Brasil and Nubank as initial partners.
Written by Angelica Mari, Contributing Writer

Facebook has chosen Brazil for the global launch of its digital payments offering. The functionality is being gradually introduced today (15) on WhatsApp, in what is one of the world's largest markets for the company.

Through payments service Facebook Pay, which should be extended to the firm's family of apps, Brazilian users and small businesses will be able to send or receive money up to 20 times a day. Transactions will only take place in Brazil and will be capped at BRL 1000 (USD 194) a day and BRL 5000 (USD 973) a month.

Individual consumers can set up an account to transact through the messaging app, providing details such as name and social security number, which will be linked to a Visa or Mastercard debit or credit card from local lender Sicredi, banking giant Banco do Brasil, or challenger Nubank. A six-digit PIN or fingerprint will be required to complete transactions.

The three institutions are offering the functionality at the time of launch, though other companies will be able to join the platform to provide their clients with the ability to transact via WhatsApp in the future. The transactions are intermediated by payments processor Cielo.

Small and medium businesses need to create a Cielo account using the WhatsApp Business app, which was introduced in January 2018 in Brazil, to receive payments from customers. While individual users can use the functionality for free, businesses will pay a processing fee of 3.99% per transaction and will be able to provide refunds and get technical support.

According to WhatsApp, the motivation for launching the resource in Brazil, the second-largest market for the company after India with 120 million monthly users, is to support the digitization of small firms in the country and to support the financial recovery of these businesses.

In an earnings call with analysts in January, Facebook's CEO Mark Zuckerberg had confirmed that WhatsApp Payments was set to launch in 2020, starting with countries where the messaging tool has a strong presence, such as Brazil.

"On payments, we're focused in different places with different products. For things like Instagram, and even a lot of what we're doing on Facebook, it's a lot more developed countries; for WhatsApp, it's the biggest countries on WhatsApp", Zuckerberg said at the time.

"So that's countries like India and Mexico and Brazil and Indonesia, which will make up a large part of the community on WhatsApp."

Appetite for digital payment services

According to research by Kantar on behalf of Mastercard in May 2020 with over 500 Brazilians on changes relating to payment habits, 75% of respondents would like to be able to pay in real-time regardless of financial service provider they use, while 53% would like to pay via messaging apps or social media platforms.

Ease and convenience were mentioned in the study as the main perceived benefits of digital payments. According to the research, the data suggests that Brazil is "fertile ground for the evolution of payments in real-time". Instant payments are set to be launched in Brazil later this year.

The Covid-19 outbreak has introduced changes in behavior when it comes to paying for goods and services, the research adds: 56% of Brazilians polled said they had changed their payment behavior due to the pandemic with about 75% reported an increase in the use of digital payments due to social distancing recommendations.

Brazilians also show "an immense appetite" for services that make their lives easier, the study said. Over 70% of consumers polled would like to use their smartphones to pay for all forms of public transport, while 56% would find it useful to share the cost of purchases such as meals with others at the time of the event.

This appetite for novelties does not mean there is a huge preoccupation in terms of security, as only 15% of those surveyed said they would not try a new payment method due to such concerns.

When it comes to methods of payment authentication, fingerprint recognition was cited the fastest and safest method by 89% of respondents, followed by retina recognition (80%); facial recognition (69%); numeric password (65%); subcutaneous microchip (53%) and voice identification (40%).

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