Brazilian authorities suspend WhatsApp payments
bloomberg.comAs a Brazilian, I'm pleased.
Our central bank is going to release a platform called PIX. Financial institutions with more than 500.000 clients are required to implement it. Finally we are going to have a standard across banks, and money transfers are going to be less complex, clunky and costly.
Of course, other apps have come before. We have apps like PicPay, PayPal and Nubank, just to name a few, that provide instant, free money transfers. Unsurprisingly, each one rolled out their own standard, but they had to register at the central bank as a financial institution. This means that, at least the popular ones, will have to provide compatibility with the central bank's platform.
This new WhatsApp feature, to me, looked like a bold attempt to kill PIX at launch. People wouldn't mind this new feature inside their banking app that already exists, for a few months, in the messaging app they're used to. If the average Brazilian user sees a QR code, is it a WhatsApp Pay QR code they see regularly? Or is it that obscure feature inside their banking app, which they didn't pay attention to? What would make more sense for businesses to adopt, for the sake of simplicity?
I'm glad Facebook will not get away with that one. If they're going to launch this feature, our central bank should make sure that it's compatible with the nationwide standard that's going to roll out. I'd rather not need Facebook to conveniently pay for my loaf of bread.
Edit: replaced "service" with "platform".
As a Brazilian, I am not pleased. This will become just another tool for the government to create artificial difficulties and sell solutions to its closest "friends". Standards have been created without any government's help since forever.
> This will become just another tool for the government to create artificial difficulties and sell solutions to its closest "friends".
What are those difficulties you are expecting?
It's absurd that most of the world is hostage of a few credit card operators to do any kind of business. Nearly all the problems one has to receive payment today are caused by those.
What's the alternative? leave facebook do exactly it instead of the government?
You speak like the free-for-all tax tools didn't work for you. Do you rather the US model? where you have to pay $100~300 every year for exactly the same tools from a single private company that has a de facto monopoly because of close ties to the government?
Also, in the US, a transfer from your checking account (where you get your paycheck) to your credit card account (where credit card purchases show up) to pay up your monthly credit card bill, in the same bank, same client, you literally see both on the same screen on your internet bank, takes two to FIVE business day. Let that sink in when talking about US banking being archaic.
The Canadian model of Interac e-Transfer works pretty nicely, and is (at worst) cheap or (increasingly) free depending on the exact bank accounts involved: https://en.wikipedia.org/wiki/Interac_e-Transfer it's pretty widely supported within Canada, both among banks and among real use cases like paying rent or moving companies as well as peer-to-peer reimbursements.
Transfer time for Interac e-Transfer ranges from instant to hours, in practice.
Similarly the Dutch iDEAL. I don’t really understand why this has to be country specific and the only international standard is US credit cards
> What's the alternative? leave facebook do exactly it instead of the government?
Not only Facebook, but any company that wishes to offer this service. Private monopolies are usually the result of government policies. In Brazil, all monopolies are like that.
> takes two to FIVE business day
That's only the case if the credit card services are powered by a 3rd party.
Chase, Wells Fargo, USBank, BECU, Alliant CU, BBVA, Citi, M&T, and others are all instant if you're paying from an account at that bank.
I think OP is talking about movement between banks. External transfer ( basically ACH ) between my banks is on average 5 days now. Last time I challenged them on this they used blanket 'fraud protection' as an excuse. When I started depositing cash as a way to deal with it, I got odd looks asking if the money is from my online business.
I dislike banking lately. And I used to be that annoying guy who goes into branch to do some transactions.
Point is, it really shouldn't take that long ( and I know for a fact it doean't ) to settle.
Can you name examples?
Brazilian here, he can't and for a good reason: The entire process for PIX, from initial engineering to final implementation is documented and made public.
The government is making this for the exact reason someone else mentioned: We're at the mercy for a handful of big players, and that's enough. One open standard for all is good. (Edit: It's also an "economy" controlling standard. Not aimed at end users. It's something for the Central Bank to keep notes on what's happening with the money going around.)
The documentation sadly is in portuguese and in PDF: https://www.bcb.gov.br/content/estabilidadefinanceira/forump...
You can find more by looking on Google for: Banco Central PIX PDF
Personal note: A lot of people sadly still believe everything the government makes equals bad or equals to something that was idealized/created by the current president in office. It's not the case here by any means (the Brazilian Central Bank runs "independently") but unfortunately a lot of people see it that way.
Great! Just make PIX an alternative to the market, not something mandatory.
That's not possible for products that rely on social networks. Facebook has a monopoly in communication in Brazil, and if they had to compete with Pix they'd win regardless of the product. Pix, however, means anyone can integrate the functionality in their application, making every service compatible with each other and increasing competitiviness.
The Bloomberg article that The Verge is referencing says that WhatsApp plans to implement PIX: https://www.bloomberg.com/amp/news/articles/2020-06-23/brazi...
Good. Then they can deploy their solution using a protocol available to all and not a closed platform made to lock the market. We've had enough of that, didn't we?
WhatsApp was always planning on implementing PIX. But PIX won't be available for at least another six months - so they went with the current system instead while they waited.
We've changed the URL to that from https://www.theverge.com/2020/6/24/21301470/whatsapp-payment.... This is the third or fourth theverge.com submission we've had to do that for in the last couple days.
To be fair to the OP, they probably don't have a Bloomberg subscription.
If this is about Pix, and I believe it is, Government is killing competitors. If Pix is better, people will choose Pix, if WhatsApp is better, people will use it. Let's not force people to use a solution and create a monopoly controlled by the Government, again.
PIX will not be a service to end-users, it'll create a standard where any service can offer instant payments and transfers.
It will increase competition in the long run because if you want to open a payments fintech, you don't need to go in every bank or other fintech to do agreements about how your app will communicate with then, you just use the PIX to communicate with everyone.
> PIX will not be a service to end-users, it'll create a standard where any service can offer instant payments and transfers.
Great. If that "standard" is something people want, it'll be able to succeed on its own merits, without having to block the competition.
What happens when someone wants to create something new and interesting that isn't supported by the "standard"? What happens when that standard lacks features people actually want? The danger of forcing everything to use a single underlying framework is that you prevent anyone from being able to do better and improve.
Sure, that's why I used the term "solution". I understand that PIX will be better than what we have today, but there's no reason to block other players and don't allow them to create their own payment solutions or products, based or not on PIX.
Sure there is. The government has the responsibility to create a free market. If a proprietary standard wins, you have a monopoly without competition. If the government standard wins that enables interoperability, no company can block other competitors.
Europe did the same and it worked.
> If a proprietary standard wins, you have a monopoly without competition
Maybe they should make their government standard good enough that it wins on its own merit then. Imo, the biggest thing this block does is essentially giving the government standard a license be as subpar as they want, because it isn't like a superior non-government standard is even allowed to compete with it anyway.
Ah, I see. There are a few banks that can decide to adopt or not a standard. Yeah, taking the choice from the government to those banks will certainly make everything better.
I don't think the Brazilian government has this responsibility as it is the most at fault for Brazil's lacking free market.
Maybe when it becomes a champion on that, removing barriers of entry, protectionism, subsidies and it's public companies monopolies, then it can be a fair judge on this issue.
What stops the government from abusing this standard to impose arbitrary restrictions on spending?
Nothing that cannot also be applied to Facebook.
The Brazilian Central Bank has authority on money transfers, so whatever regulation they want to arbitrarily impose regarding this matter, they can do.
Facebook is a registered company in Brazil, they were going to operate the payments platform through a card processor, etc, so directly or indirectly they are under the authority of the Central Bank.
EDIT: by the way, regular banks and fintechs already have to be a participant in the Central Bank's payments system in order to settle funds. PIX is (also) a 24x7 implementation of the existing electronic money transfer system which only is available on working days.
Facebook is a very unique position here, don't play it as "free market" when one player has control over more than 50% of the messaging communication going on in Brazil, Bacen is blocking the current implementation of WhatsApp Pay, doesn't mean if they integrate with PIX they won't be allowed. If they don't integrate with PIX then it's quite easy, given their position, to force users to stay only inside their platform, with PIX they are allowed to participate in the larger ecosystem, it's a better solution for all.
There is no competition when network effects take hold and create a de facto monopoly, like with messaging apps.
Facebook a multi hundred billion $ company vs much smaller companies in Brazil. I would think that the government here did the right thing. Let your home grown companies grow first, then let them compete openly with foreign companies.
If companies are people, then companies in many 3rd world countries are children. You don't let adults hit children until they grow to be adults.
GP's point (which I believe is naive, I suspect foul play from competitors, especially big banks) is that FB was trying to corner the market through network effects before an open standard took hold and the Central Bank acted to stop that from happening.
And now PIX will never be implemented.
PIX is in test and will be available to all brazilians from october. Several payment operators are implementing it's protocol.
Hope you are right.
In Brazil, we have had same-day money transfer (normally it takes 15 min) among accounts in different banks. Same bank accounts have "instantaneous" money transfer. PIX will make it simpler for newcomers.
> If Pix is better, people will choose Pix, if WhatsApp is better, people will use it.
Yes, let Facebook and Apple invent their own internet too, with no compatibility between them. Let's also allow Ford / GM to create their own roads exclusively for Ford / GM vehicles. /s
This is not businesses we are talking about, it's public infrastructure. And banking is a public infrastructure.
Have a little faith? Compuserve, Prodigy, AOL, and a raft of others tried to make "their own internet" in the 80s/90s and the open system won out.
> Have a little faith?
No, thank you. I am from India, a country that lost its independence and was ruled and looted as a colony by a corporate called the East India Company. I have no faith in or trust in corporates.
In a healthy democracy, Government regulations and standards are a MUST to protect us from the greed of the corporates, and to create a level playing field.
Facebook is an american company and I applaud the wisdom of the Brazil policy makers to make it abide by their country's rules.
government standard for electronic wire transfers beats checks (duh) or private standards designed to extract money from the market. bank implements pix, another bank implements pix, customers are happy because they can transfer money securely to each other. at least that's how this works in the EU.
No matter how good PIX is, as a local standard it will never be able to do what Whatsap (may) be able to do - transact with foreigners.
Oh, this would be a whole can of worms that Facebook would not want to open.
International transactions are very regulated in Brazil and certainly not only the Central Bank would be heavy with their hammer, but Receita Federal (tax authority) would also be very interested in this.
When PayPal started operating in Brazil, they had to convert all Brazilian accounts held in USD to BRL, and there are some restrictions on currency exchange operations that accounts registered in other countries don't have.
> This new WhatsApp feature, to me, looked like a bold attempt to kill PIX at launch.
I don't think so. FB is using UPI in India, they could have used PIX too. Looks like Brazilian government was just a bit late to the payment party and FB had already implemented something in-house in the meantime.
Even with all the economic struggles, Argentina was ahead many countries in the world regarding bank integrations. For years you can make immediate wire transfers between banks without any extra fee (beyond the taxes imposed by the state). If you want to create a digital wallet you don't need to be a bank, you can register as a payment processor and get virtual bank accounts (CVU) for every user which are compatible with the banking system. MercadoLibre/MercadoPago is one of the top players in this space and use a banking API (https://apibank.bind.com.ar/) behind the scene.
So PIX is like UPI(https://en.wikipedia.org/wiki/Unified_Payments_Interface) in India?
And you're 100% sure that this is not just currency controls because the Brazilian Real is getting killed? From what I can tell - Brazil is going to Argentina, quickly :(
These currency controls are in place for decades and our current financial crisis has nothing to do with that.
It's absolutely that, and the only competition it killed is for upcoming stablecoin revolution in high inflation countries.
I think this is what happens when you start to push for something without talking with local authorities, they need to remember that it's all about the politics and that's everywhere.
>...I'd rather not need Facebook to conveniently pay for my loaf of bread.
If you need any app to pay for a loaf of bread, then you have far more deep seated systemic issues than "OMG Facebook!!".
> money transfers are going to be less complex, clunky and costly.
You really think the Brazilian central bank is going to make a smooth, efficient, and cheap money transfer service? What reason do you have to expect that to work?
> You really think the Brazilian central bank is going to make a smooth, efficient, and cheap money transfer service
They will not do a transfer service, they will provide a specification that must be follow in order to provide instant payments and transfers.
To be honest, our central bank is pretty good in create such specifications.
As a Brazilian living in the US I can tell you that the TED system is already a smooth, efficient, and cheap money transfer service compared to the solutions here in the US.
So I have total confidence that they are capable of creating a better yet version of it.
As a Brazilian living in Canada, I can say the same.
As a Brazilian living in Brazil I'm surprised that anyone would expect a service provided by the Brazilian government to be efficient, or even work at all.
This Pix thing seems to cover more than inter-bank transfers, people are expected to use it for QR code-based mobile payments for instance.
The HIV treatment program, provided by the brazilian government for free to everyone that needs it, has been very succesful and is a model to be followed. Not everything the government does is rotten, just a lot of it.
"Throughout the 1990s, when the annual cost of drugs for AIDS treatment often exceeded US$10,000 per patient, the World Bank and other development agencies discouraged developing countries from implementing treatment programs, favoring “cost-effective” prevention over costly treatment. Brazil challenged this conventional wisdom and, despite World Bank objections, has provided free universal access to highly active antiretroviral therapy (HAART) for all people living with HIV/AIDS since 1996." source: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2782963/
You have a very narrow world-view. You can not even imagine...
What solutions have you tried in the US? Venmo and Cash App are both free and work up to like $2500, at which point you have to deal with government systems like ACH and it gets slow and expensive.
The US banking system is archaic compared to elegant systems like they have in Australia/New Zealand (and probably Europe). No malicious rent-seeking third parties needed in the transaction.
Perhaps you should do a little bit more research. Zelle allows payment between banks (almost) instantly. No fee, since it's a service owned by participating banks, practically all major banks in the US. Zelle processed $187 billion in 2019.
Perhaps you should do a little research and find that the rest of the world has been doing that between all banks for a decade or two.
Not mention its ubiquity that allows everyone from teens to grandparents to pay .25 for a cookie, to dropping a down payment, to paying bills, to filing taxes, to automating a weekly rent check. Basically an elegant single system required for modern life.
The fact zelle, launched in 2017, has a brand name, and competes for mindshare illustrates how they missed the target. In other countries it’s called banking.
Pretty sure you are viewing it from an American perspective. India has had a government created smooth efficient money transfer service for >17 years now. There are multiple systems - all created by the government - and they work perfectly almost all of the time.
Just wondering (not criticising), why would the government create and run multiple systems doing the same?
Is this something to do with the differences between regional states in India?
Brazilians can already do inter-bank money transfers using their bank accounts apps cheaply.
Pix is an improvement over those systems (shorter processing times - as in seconds instead of minutes) and checks are almost nonexistent.
I wouldn't say cheaply... Unless you have a digital-only account or has a high-class account (like VanGogh,Personalitté, etc) it's cost almost 9 BRL for a inter-bank transfer.
9 BRL is what? 2 USD?
Compare with https://answers.usbank.com/answers/s/article/How-much-does-a... (spoiler alert: 10x more - for both senders and receivers)
Whatsapp transfers would be ~ 5% of the cost which would make it more expensive for anything over 200BRL
Meanwhile inside the SEPA Area (EU), National and International payments have the same cost (which is usually 0)
In the US I pay $0 for transfers under like $2500 using various free services like Venmo or Cash App.
Good to know
Do business accept Venmo (I know some do, though it seems Venmo is backed by a pre-paid card)? Can you pay your rent with it, for example? Tuition? Buy a car with it?
The payment methods I mentioned don't require people to install an app or enter an agreement, you have a bank account they're available to you. Sure, there's some typing of numbers (but that's pretty much a copy-paste today). Not to mention the privacy issues with Venmo.
Things like rent, tuition, and car payments are done in the US with ACH. Takes a day to clear (which is fine for scheduled things like that) but free.
You entered an agreement when you got a bank account in the first place...
These payment apps tend to work like another bank account in practice.
People use P2P apps when they want to casually send money to people they know. For merchants they get the square app and process credit cards directly. Venmo & friends tend not to be good for actual business for large transactions due to how bad chargebacks can be on it, so for large transactions you can use ACH which tends to be $0.25 for pretty much any money value, or free in many cases.
Has worked elsewhere. Here in the UK, money transfer is mind boggingly fast, and free.
EU "faster payments" system. We don't quite have the last mile of hooking it up to apps with QR codes, though. To add another to the list, see Norway's VIPPS.
Is this what replaced ACH in the EU? It baffles me that it still takes 2-3 business days to perform transfers in the US over ACH.
It is everywhere in Europe but there is a problem with IBAN transfers. It exposes a lot of details, like your name and your bank branch, to the receiver. And some sites accept IBAN numbers for small payments without any other kind of authentication.
It's an electronic version of the times when we used to mail transfer cards to do transfers, but this day and age needs a lot more privacy protection. Same with other old tech like the phonebook. Who gets themselves listed anymore? It leaves you open to way much spam and scammy crap calls.
Well, they've done pretty well in the past. I'd worry more about random ATM outages from Banco do Brasil than the standard being bad.
Brazil is pretty far ahead of the USA when it comes to money transfers, though I grant that this is a pretty low bar.
Why do services like whatsapp need support for this? We have URLs people!
Here I just send an URL to my friend via whatsapp. They click on the link. The site takes care of giving user whichever payment method they desire. User pays. That's it.
From a user's perspective to pay I just have to click a link. And to get paid I just send a link. How easier can it get?
In Canada people can pay you by having your email or phone number in their bank app.
Works really well!
That's problematic and not as good as direct bank to bank transfers.
Electronic Money Transfer (EMT)/e-transfering is a bank-to-bank transfer in Canada.
It may be convenient use other ids besides bank account numbers, but it adds another avenue for mistakes.
Such as...?
To me, passing around a long unstructured numeric string is a lot more error-prone than selecting a contact from my banking app, or writing a short, structured phone number or email address. In any case, the recipient needs to know the secret one-word answer to the question set by the sender, which would prevent wrong parties from claiming money (this can be skipped if the recipient registered their phone number or email address forbauto-deposit).
They are not unstructured and have checksum digits in proper implementations.
Why do services like whatsapp need support for GIFs? We have URLs people!
Here I just send an URL to the GIF to my friend via whatsapp. They click on the link. They look at the GIF. That's it.
From a user's perspective to see a GIF I just have to click a link. And to send one I just send a link. How easier can it get?
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I swear HN's community has the brightest minds yet so often it fails to understand simple user experience stuff (see the infamous Dropbox comment)
Whatsapp could allow plugins from banks or other payment providers using an open standard that other applications could use. Just like i can choose to open a link in Chrome or Safari or Firefox, why not open a 'payment request in ... ' I fear tech companies using their market dominance to gain a monopoly, like 'Apple Pay' with iPhone apps.
Whatsapp is aiming to become an all-in-one solution. When I click on a link in Whatsapp my phone takes at least 10-20 seconds to open the page, and that could be eliminated - similar to M-Pesa in Africa...
Fraudsters may trick people into sending the wrong URL.
If Whatsapp controls the payment platform, they can prevent a lot of fraud by mining their meta data. For example, if the payment is marked as a gift, but the parties do not have a vibrant conversation, there is likely fraud.
Why doesn't Facebook do it in the US? Too much opposition from the large payment processing lobby?
lack of users might be the case. WhatsApp is ridiculous popular in Brazil, but not that relevant in north america.
This. I was surprised a year ago or so when I last travel to US that Wap was not ubiquitous like in pretty much the rest of the world.
WA is not ubiquitous in some big parts of the world. It's not like it is ubiquitous in "the rest of the world". In China at least WeChat takes the crown and I don't know about other Asian countries.
Lets not make WA seem more "unavoidable" or seem more ubiquitous than it really is. It's got sufficient network effect already.
In south east Asia it's mostly Line and WeChat.
WhatsApp is huge here and we don't have Venmo or CashApp
Open banking is required, please wait.
TIL Whatsapp had payments... Is Facebook just copying WeChat?
I would expect that WhatsApp had to get an approval before the launch? Is Brazil less regulated when it comes to payment processing?
Brazil is well regulated as far as payment processing is concerned. And Whatsapp's maverick approach didn't go well with both the central bank and the competition authority. They'll have to conform before proceeding.
The article says they were in contact before this.
> Bloomberg reports that WhatsApp was surprised by the Brazillian Central Bank’s decision, since the company had been in regular contact with the authority. WhatsApp had started a small test of the service in the country around a month prior to its launch.
God, stop using code blocks to quote things.
I'm sorry. I'm not yet used to citing on this platform.
Don't worry, it's okay. It sounded harsher than I intended ;) Welcome to HN!
No need to apologize.
HN needs to have a proper way to do quotes. > doesn't indent beyond the first line once word-wrapped, | looks cute but is confusing, code-blocks suck, etc.
> this style works well, even if applied over multiple lines. Lorem ipsum dolor sit amet, consetetur sadipscing elitr, sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, sed diam voluptua. At vero eos et accusam et justo duo dolores et ea rebum. Stet clita kasd gubergren, no sea takimata sanctus est Lorem ipsum dolor sit amet. Lorem ipsum dolor sit amet, consetetur sadipscing elitr, sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, sed diam voluptua. At vero eos et accusam et justo duo dolores et ea rebum.
Stet clita kasd gubergren, no sea takimata sanctus est Lorem ipsum dolor sit amet.
at least IMHO
">" is fine. Nobody is confused by it. The only thing worth changing is to remind people to use it instead of inventing their own apparatus.
Yes for the love of god
I tend to use italics (denoted by asterisks) for quotes.
I never wanted to be famous. I only wanted to be great.
-- Ray Charles
WhatsApp does payments??? I never knew of this.
In fact I see no sign of it in the app whatsoever. Must be a regional thing?
They should try in Spain or other European countries where Coronavirus has hit hard and has high WhatsApp usage
Europe already has easy money transfer
Brazil too.
Not that easy. You need to exchange the IBAN and add it in your bank app. In Spain there’s Bizum which allows to send to a phone number but it doesn’t have nearly the popularity of Whatsapp. And it’s national only. We’re missing a Europe-wide solution.
Spain has Verse and Bizum (from Caixabank).