- At the time of the suspension, only a few days after the service launch, the Central Bank was accused by some experts of “blocking” WhatsApp Pay so as not to hinder the launch of its own instant payment system, PIX;
- According to the executive, the problem with a big tech in the financial system is that, normally, it already born big. So it also has to go through a more deep analysis from the beginning.
The director of financial system organization and resolution at the Brazilian Central Bank, João Manoel Pinho de Mello, said this Monday, during a live video by the newspaper Valor Econômico, that the monetary authority did not extrapolate its role when suspended WhatsApp Pay, the new payment service of Facebook‘s app that debuted in Brazil on June 15th.
At the time of the suspension, only a few days after the service launch, the Central Bank was accused by some experts of “blocking” WhatsApp Pay so as not to hinder the launch of its own instant payment system, PIX.
“We need to ensure that it is an opportunity, not a problem. By legal determination, the Central Bank has not only the prerogative, but the obligation to ensure that payment solutions are interoperable (from the same account, payer and recipient have to be able to talk to access the entire service, all institutions), neutral (everyone can participate), isonomic from a competitive point of view, and, within the Central Bank innovation agenda (called BC +), cheap “, said the executive.
Mello suggested the Central Bank expected to receive more formal information from the regulated entities here in Brazil, that is, Visa and Mastercard, before the service was launched.
“We saw a lot more (information) from the press than from formal information, and that, by the way, shouldn’t be done by Facebook or any other Big Tech, but by our regulated agents. In this case, Visa and Mastercard,” stressed the executive when saying that one information that reached the institution through the press was the high price of WhatsApp Pay transactions for businesses: 3.99%. Today, according to Mello, a debit transaction costs on average 0.90%, and a credit transaction 1.7% in the country.
He said that both card networks have already given the necessary information and that the service is under analysis. Two weeks ago, WhatsApp chief Will Cathcart told Broadcast, Estadão‘s real-time news service, that the app plans to join PIX, but that he also hoped Visa and Mastercard would find a way to resume the service soon.
In the case of PIX, Mello stressed that the Central Bank does not offer any product, but only takes care of two basic structures of the instant payments system and it has the role of setting the rules by which all institutions will operate – stressing, therefore, that the monetary authority’s attitude towards WhatsApp Pay was not motivated by “competition”.
Big Techs in the eyes of Brazil’s Central Bank
When asked about the Central Bank’s stance when it comes to big techs entering the financial system in general, Mello pointed out that when the economic environment changes, regulation and the role of Central Banks end up changing as well.
He said that in almost all countries that are part of the Bank for International Settlements (BIS), the institution that brings together Central Banks, “this (a means of payment or a new service like WhatsApp Pay) is seen as an essential structure, which needs the government interference in regulation”.
Mello said that “big techs are a vector for inducing competition and creating value”, but that this must be ensured by Central Banks. He pointed that fintechs and small institutions, with less than 500 thousand accounts, are not obliged to follow a series of rules at the beginning, because it would not be fair to make them bear a higher cost than necessary to grow at first. The problem with a big tech in the financial system is that, normally, it already born big. So it also has to go through a more deep analysis from the beginning.