You heard right, WhatsApp Pay. If these two words sound familiar to you, it’s probably because WhatsApp’s payment feature went from being the most expected launch of the year to a legal maze ending in a 404 error page.
The story of this not-so-brand-new feature dates back to 2018. Did you know already two years have passed since WhatsApp first launched a beta version of it? How come that most people knew nothing about that? Well, it did happen on the other side of the world, but we would have definitely known more if WhatsApp didn’t keep it this quiet. The messaging giant has been keeping a low profile since day one, making it almost impossible for users on this hemisphere to find out something about its new service.
Sprints and Sneakers to the rescue 🚀, we dug a bit deeper for you.
“Sorry, page not available”
Chances are, if you are a curious, European user who just heard about the up and coming possibility to send and receive money by message and want to learn more about it, you will stumble into a page on WhatsApp‘s website stating: “the payment feature on WhatsApp is not available in your country”. Great. But you do not give up that easily, and even though you are kindly asked to drop it and to “please check again later”, you cannot help but notice it. A learn more button. It promises you to tell you something about the countries and regions that currently support the payment feature, so you, of course, click on it.
Guess what? This page is not available in your country. Again. And again, you are asked to basically forget about it, at least for now, to come back later, a minute or a decade, we will never know. By this point, we are quite sure you had enough. But we didn’t. Fake news flooding the internet on one side, WhatsApp refusing to release statements on the other, it is no surprise that no one seems to have a clear idea about what is going on with WhatsApp payment. About where, when, and if it is a question of how or whether it will happen.
Here’s what we know.
1. Where it all began
It all started in January 2018, with Mark Zuckerberg started sharing his plan to offer the service in India, Indonesia and Mexico. On the 8th of February 2018, WhatsApp payment was tested for the first time ever in India, where 400 million users make the country WhatsApp’s largest market. This choice makes even more sense if you consider that India is home to more than a third, roughly 15 million, of the 50 million users of WhatsApp’s youngest brother, WhatsApp Business.
The beta test saw a million users using the new payment feature through India’s Unified Payments Interface. UPI is an instant real-time payment system developed and owned by the National Payments Corporation of India and regulated by the Reserve Bank of India. The enthusiasm did not last long, a few months later, due to the Indian government’s privacy concerns over data localization and payments data sharing with Facebook, the beta test had to be suspended. More than a year later, in July 2019, the test resumed, on the condition that the service would have complied with the Reserve Bank of India’s data localization rules, opened an Indian headquarter, and appointed a grievance officer to deal with users complaints, as requested by the Indian Cyber Law.
With the test back on track, suddenly the headlines of every magazine from every corner of the world were forecasting the launch. Expected to be available next month, will be launched by the end of the month, and so on. Every month, for months. Until everything was halted again. WhatsApp was still tangled in legal disputes. The latest? On the 2nd of June this year the Good Governance Chamber (G2C) filed a public interest litigation against WhatsApp, claiming that the real issue is about data protection and the sharing of millions of users’ financial data. The whole matter is beyond confusing, with the PIL not accusing WhatsApp of any real violation and the G2C having no real interest in privacy matters and having been created just two months before. This, and many other legal battles, are the reason why WhatsApp did not manage to break into its largest user base yet, with the payment feature limited to those original 1 million beta users, in a market that would actually count 400 million.
2. The first launch
Eventually, the actual launch did happen. Two years after the first beta test, 15 thousand kilometers away from India, WhatsApp Payment finally saw the light. For a whole week. It’s the 15th of June of this year, and Mark Zuckerberg announced the launch of the service in WhatsApp’s second main market: Brazil. “Today we’re starting to launch payments for people using WhatsApp in Brazil. We’re making sending and receiving money as easy as sharing photos”. With the difference that this time the service will be supported by Facebook Pay, which will allow 120 million Brazilian users to send and receive money free of charges. Business owners will have to pay a 3.99% fee at the receipt. India’s regulation was suffocating a possible launch. But so did Brazil’s. A week after the launch, on the 23rd of June, Brazil’s central bank pumped the brakes on the plan. The reason seems to have something to do with making sure that WhatsApp wouldn’t be the one and only player in the online payment field, as explained in this statement: “The reason for the central bank’s decision is to preserve an adequate competitive environment, ensuring an interoperable, fast, secure, transparent, open and economical payment system”. Long story short, to make sure that WhatsApp would not control the market, killing the native Brazilian financial institutions. Specifically, Banco Central do Brasil (BCB) ordered Vis Inc. a and Mastercard Inc. to suspend the start of activities and to immediately stop using WhatsApp to allow payments and transfers, and that failing to do so would result in a fine. In addition to that, to preserve the competition, the Administrative Council for Economic Defense (CADE), Brazil national competition regulator, temporarily cut ties between WhatsApp and Cielo, its electronic payment company partner. partner. The decision stems from the fact that the messaging app user base combined with Cielo’s prominent position in the online payment market would most likely result in a barrier way too high for any new competitor. The BCB also pointed out that they did not have the chance to review the deal nor the payment service policies before the launch, hence the need to suspend everything until further notice.
WhatsApp is no new to this legal hassles by now. Nevertheless, the feedback from users in that week from the 15th till the 23rd was so positive that the suspension was seen as nothing more than a little roadblock. In fact, WhatsApp stated they would keep working with local authorities to eventually be able to provide their payment service to all their Brazilian users. Not only collaborating, but fully committing to support PIX, BCB’s own digital payment service, by integrating the two systems as soon as PIX will be up and running.
3. Recent updates
India has three players on the online payment scenario: Paytm, Phonepe (online payment platform owned by Walmart) and Google Pay. The competition between the three is tight and WhatsApp has fallen way behind. This, together with endless legal battles and regulation issues, constitutes a big barrier for WhatsApp to tap the country’s full potential. WhatsApp is currently waiting for Indian authorities to review the accusation, and for the G2 Chamber to drop the charges.
The South American country was a great testing ground, even though the service is still suspended, BCB’s chief Roberto Campos Neto stated that the feature will be approved after a regulatory process, that will ease the privacy and competition concerns as well. Initially, the service will be limited to users whose bank is either Brazil Central Bank, Nubank or Sicredi, using MasterCard and Visa cards.
4. What’s next?
There is no doubt the intention is to bring the service to other countries, even though we cannot know exactly where or when. Indiscretions saw WhatsApp improving some aspects before offering the service to European countries, especially Spain seems to be the next market for the feature to be offered and British users could see the payment button coming on their app by 2021. But again, we will need official confirmations for these to be more than assumptions.
What can we expect?
- We can assume there will be limitations, at least in the first period after the launch. In brazil each user will be able to transfer money to another user for a maximum of 20 activities per day, not above R1000 (+/- $193) dollars, by debit card only, without exceeding the R5,000 (+/- $965) monthly limit. Things change for business owners, who will be able to add a credit card and have none of the previous limitations.
- Security features: payments will require the use of a six-digit code or a fingerprint, such as the Facebook Pay PIN and biometrics (on devices that offer this alternative).
- We saw the feature supported by UPI in India, first by Facebook Pay, then Cielo, and soon by PIX in brazil. This means WhatsApp is using an open, flexible model, and it’s likely that it will see other companies joining in, according to what best suits each country.
WhatsApp Pay: how-to
- First, you will have to set up the payment feature, by adding a new account to the Bank Accounts header.
- You will be asked to accept the terms and conditions (read carefully, as always).
- Then you’ll have to verify your account through SMS.
- After adding your bank account, you will finally be able to receive and request money through the app, the same way you can now share pictures and locations.
5. Europe and data protection
Facebook has a troubled history when it comes to data protection. It was fined 110 million from the European Commission for “falsely claiming it was technically impossible to automatically combine user information from Facebook and WhatsApp” during 2014’s acquisition, only to then share WhatsApp information and use it for Facebook advertisement. An incident that Facebook acknowledged as unintentional. (read more about it on our blog about WhatsApp Business). Would this drive European users away? Or would they trust Facebook Pay as a payment processor? Young users grew more and more aware of data protection concerns, and they learned not to blindly accept terms and conditions. Only time will tell if Facebook name will bring a cloud of suspicion over WhatsApp and its new feature, we will keep watching as the service is slowly released on the market, looking forward to seeing what will come next.