Why Facebook's WhatsApp Launched Its Payments Service In Brazil

Facebook Inc FB-owned WhatsApp has launched its first rollout of payments on the platform in Brazil.

What Happened: Facebook says it has built payments with security in mind, and a special six-digit PIN or fingerprint will be required to prevent unauthorized transactions. The service is free for consumers to use.

Users will need to link their WhatsApp account with a Visa Inc V or Mastercard Inc MA credit or debit card. The company’s partners include Banco do Brasil, Nubank and Sicredi.

Why Target BRIC Markets? Is there a reason why Facebook is targeting the emerging markets? Over the years, countries such as Brazil, Russia, India and China - the BRIC markets — have been moving toward adopting digital payments.

Adam Traidman, the CEO of BRD, a cryptocurrencies digital wallet company, says the emerging markets in today’s world are technically savvy, yet many have fewer payment options than a country like the U.S., where citizens send payments via Venmo, Zelle and many other avenues.

“The lack of options, coupled with a technically ready country, creates for major opportunities in these fast-developing countries. It makes complete sense to deploy new payments technology to these types of markets for these reasons.” says Traidman.

What Happened To Libra? Facebook has been struggling to gain regulatory approval in the U.S. for its project Libra, which is a permissioned blockchain digital currency. The currency and network do not exist yet; the Libra Association has been revamping its white paper.

“Not only is this [WhatsApp payments service launch] clearly part of Facebook’s larger initiative to push peer-to-peer-like payments, but this is also a social validator for decentralized peer-to-peer payments like Bitcoin and other digital assets,” says Traidman. 

More people will become accustomed to transacting in this manner using WhatsApp payments: instead of needing to login to a banking website, users can pay merchants by ending a message in the app, he says.

“Similarly in the cryptocurrency space, you don’t need to log in to a bank website. You can send funds straight from your personal wallet.” 

FB Price Action: Facebook shares were slightly positive at $235.70 at the time of publication Wednesday. The stock has a 52-week range between $241.21 and $137.10.

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