The Central Bank of Brazil has effectively suspended a newly-launched system allowing users of Facebook’s WhatsApp messaging service to send money via chats, ordering Visa and Mastercard to halt payments and transfers via the system.
The central bank said in a statement that rolling out the service without previous analysis by the monetary authority could damage the Brazilian payments system in the areas of competition, efficiency and data privacy.
If Visa and Mastercard do not comply with the order, they would be subject to fines and administrative sanctions, the statement said.
The system, launched last week in a nationwide rollout, allowed users to transfer funds to individuals or local businesses within a chat, attaching payments as they would a photo or video.
The central bank’s move is the latest setback in payments for owner Facebook, which pared back its plans for a global payments system called Libra after meeting stiff resistance from regulators.
Earlier on Tuesday, before Visa and Mastercard operations with WhatsApp were suspended, the central bank issued regulation saying it could require market participants to receive previous approval to operate in payments.
WhatsApp launched its Brazil services without requesting central bank authorisation, as it was operating as an intermediary between consumers and financial institutions.
The central bank’s move comes as the regulator prepared to launch its own instant payments system in November, called Pix, joining more than 980 participants.
The WhatsApp spokesperson said it was committed to working with the central bank to integrate systems once Pix became available.
Mastercard said it would comply with the central bank ruling and continue to develop an innovative payment environment.
Facebook and Visa did not immediately reply to requests for comment. Cielo declined to comment.