June 15 – WhatsApp announced plans to offer digital payment services in Brazil. Local users will be able to exchange money with friends for free while businesses will pay a 3.99 percent fee to receive money. The company will facilitate transactions via Facebook Pay and regional financial institutions Banco do Brasil, Nubank, and Sicredi.
As Facebook declined to place ads on its subsidiary, the new program represents the Big Tech brand’s first attempt to monetize the messaging platform.
WhatsApp Payments Details
In a blog post, WhatsApp explained it is integrating a payment option into its services because Brazilian consumers already use it for commerce.
In 2018, the corporation introduced a business segment to its platform that allowed shoppers to interact with companies and added a feature that lets consumers browse store catalogs. Besides, with 120 million monthly active users (MAUs), Brazil is WhatsApp’s second-largest market behind India, which is home to 400 million MAUs.
The social media company also noted the region’s more than 10 million micro and small businesses make it a good match for the payments service.
WhatsApp stated it would protect subscribers by requiring them to authorize transactions with a six-digit PIN or fingerprint scan. The corporation plans to expand its new service beyond Brazil and to integrate it throughout the Facebook ecosystem.
WhatsApp’s Future Plans
Facebook’s efforts to transform WhatsApp into a profit-generating enterprise likely go further than facilitating local e-commerce.
Last June, the social media giant revealed plans to enter the financial sector with its Libra cryptocurrency offering and Calibra digital wallet. However, the corporation immediately encountered intense regulator resistance to its project, so it pivoted and positioned its banking product as an online payment processor.
The conglomerate’s expansion of WhatsApp’s services seems like an extension of that initiative.
Over time, Facebook could evolve the messenger into a more robust banking platform that offers lines of credit, savings accounts, and, most importantly, remittances. In January 2020 alone, Brazilians remittances exceeded $325.9 million. The firm could make its subsidiary into a major earner in-country just by changing a small fee to send and receive money internationally.
In addition, WhatsApp will likely try to introduce its digital payment services to India next. In May, Facebook purchased a 10 percent stake in Jio Platforms, an Indian brand that provides local telecommunication services. Simultaneously, the conglomerate announced plans to work with Jio to use WhatsApp as a payment processor for an e-commerce platform called JioMart.
In the past, Facebook’s efforts to generate more money in India have failed due to regulatory objections. But if things go well in Brazil, the corporation might use it as evidence to sway the opinions of local officials. As India received $15 billion in foreign money transfers in Q4 2019, it represents a huge addressable market for the social network.
When five Harvard students founded Facebook in 2004, they intended to serve as a communications platform. But today, the platform functions as one of the world’s biggest and most successful advertising channels. As such, it is not inconceivable that the WhatsApp messenger service could one day become a massive multinational bank.