The launch of WhatsApp’s payment service comes as a surprise to very few observers in the global payments industry. Will its launch in Brazil mean it will automatically find global success?
WhatsApp has been trialling a payment service in countries such as India and Indonesia, in addition to Brazil – a country where mobile banking is the norm, while communication between consumers and businesses via the messenger service is well established.
“We are very excited to bring payments on WhatsApp to our users across Brazil. Making it easier to send and receive money could not be more important at a time like this,” said Matt Idema, Chief Operating Officer at Whatsapp. “Small businesses are the backbone of the country. To be able to easily make sales right within WhatsApp will help business owners adapt to the digital economy, as well as foster growth and financial recovery.”
Brazilian neobank Nubank becomes one of the first institutions to offer the service to customers at no extra cost. “Nubank’s mission has always been to fight the complexity people face in their relationship with money. Now, our clients will be able to make payments on WhatsApp as easily as they chat with friends, without extra fees”, said David Vélez, founder and CEO of Nubank.
But according to Ivo Gueorguiev, co-founder and executive chairman at Paynetics, there are certain complications around payments that are specific to the Latin America region which made sense for WhatsApp. These same factors may also hold it back from rolling it out to the rest of the world in the same way.
“There are some significant advantages to the current offer which are very particular to this region (for instance regarding taxes, remittance and currency) but globally without these advantages, there may not be as much of a requirement or, indeed, demand,” warns Ivo.
Couple this with the often-cited lack of trust in Facebook and growing security and privacy concerns, he says, and it will be interesting to see how the company approaches growing its payment platform going forward.
“A more viable option is one where payments are embedded into the Facebook marketplace or other channels, such as Instagram, and where they can drive frictionless payment experiences for WhatsApp users. In a climate where e-commerce is booming, this could be a significant challenge to more established players in the industry.”