WhatsApp Payments Service Resumes in Brazil, Extending to SMEs on WhatsApp Business

Highlights

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• WhatsApp's payments service in Brazil received regulatory approval in March 2023.
• Initially, the feature was only available to select users for peer-to-peer transactions.
• In April 2023, WhatsApp began rolling out its payments tool to small and medium-sized enterprises (SMEs) on WhatsApp Business.
• This means that users can now make purchases and payments directly through the app with a few taps.
• The expansion of the payments feature to SMEs could potentially revolutionize the way businesses operate on WhatsApp, making it easier and more convenient for both customers and sellers

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Brazil is one of the largest markets for WhatsApp, with over 120 million users. The messaging app has become an essential tool for communication, social networking, and even business transactions. In fact, WhatsApp is so popular in Brazil that it accounts for more than 90% of all mobile internet traffic in the country.

But WhatsApp is not just a chat app. It is also a platform for e-commerce, especially for small and medium-sized enterprises (SMEs) that rely on WhatsApp Business to connect with their customers and sell their products and services. According to a study by Facebook, the parent company of WhatsApp, 76% of Brazilian SMEs use WhatsApp as their main sales channel, and 84% of them say that WhatsApp helps them increase their sales.

However, until recently, there was one missing piece in the WhatsApp e-commerce puzzle: payments. While users could browse products, chat with merchants, and place orders through WhatsApp, they still had to use other methods to pay for their purchases, such as bank transfers, cash on delivery, or third-party apps. This added friction and inconvenience to the shopping experience, and sometimes resulted in lost sales or fraud.

That's why WhatsApp decided to launch its payments feature in Brazil, starting in June 2020. The feature allows users to send money and pay for purchases from local merchants without leaving the chat app. Adding a payment method is done through Facebook Pay, which means users can use the same information they have saved to Facebook to buy things on the platform's Marketplace page and send money to friends over Messenger.

The payments feature is free for users and personal transactions, but merchants have to pay a 3.99% fee per transaction. The feature is provided in partnership with payment processors including MercadoLibre's Mercado Pago, Itau Unibanco's Rede and Cielo , and supports credit and debit cards from Mastercard and Visa.

The launch of payments on WhatsApp was not without challenges. The feature was initially suspended by Brazil's central bank just a week after its debut, citing concerns over competition, efficiency and data privacy. The regulator wanted to ensure that WhatsApp complied with the rules of the country's instant payment system, PIX, which was launched in November 2020 and allows users to make free and instant transfers between different banks and platforms.

After nearly three years of regulatory scrutiny and negotiations, WhatsApp finally received the green light from the central bank in March 2023 to resume its payments service in Brazil. The feature was initially available only for some users who could send money to each other through the app, but in April 2023, WhatsApp began rolling out its payments tool to SMEs that use WhatsApp Business. This means that users can now make purchases and pay directly through the app with a few taps.

This development is expected to have a significant impact on the e-commerce landscape in Brazil, as it will enable millions of SMEs to offer a more convenient and seamless shopping experience to their customers. According to a survey by Ipsos MORI commissioned by WhatsApp, 83% of Brazilian SMEs that use WhatsApp Business say that accepting payments through the app would help them grow their business.

WhatsApp is also planning to expand its e-commerce capabilities by launching a commercial directory for WhatsApp in Brazil, which will allow users to find and discover businesses with business messaging accounts. The directory will include categories such as food, retail, beauty, and services, and will show information such as location, hours of operation, ratings, and reviews.

WhatsApp's vision is to create a "super app" that combines communication, social networking, e-commerce, and payments in one platform. By doing so, it hopes to empower millions of SMEs in Brazil and other emerging markets to reach new customers, increase their sales, and grow their businesses.