Brazilian authorities suspend WhatsApp payments
bloomberg.com
bloomberg.com
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".
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?
Is this something to do with the differences between regional states in India?
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.
So I have total confidence that they are capable of creating a better yet version of it.
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.
"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/
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.
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.
Pix is an improvement over those systems (shorter processing times - as in seconds instead of minutes) and checks are almost nonexistent.
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)
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.
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.
Brazil is pretty far ahead of the USA when it comes to money transfers, though I grant that this is a pretty low bar.
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.
Europe did the same and it worked.
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.
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.
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.
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.
There is no competition when network effects take hold and create a de facto monopoly, like with messaging apps.
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.
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.
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.
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.
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.
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.
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 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.
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.
Transfer time for Interac e-Transfer ranges from instant to hours, in practice.
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.
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.
If you need any app to pay for a loaf of bread, then you have far more deep seated systemic issues than "OMG Facebook!!".
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?
Works really well!
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).
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.
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)
Lets not make WA seem more "unavoidable" or seem more ubiquitous than it really is. It's got sufficient network effect already.
> 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.
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at least IMHO
I never wanted to be famous. I only wanted to be great.
-- Ray Charles
In fact I see no sign of it in the app whatsoever. Must be a regional thing?