WhatsApp Pay Brazil Expands to Business Payments World – Industry Responds

Outside Asia, WhatsApp’s The largest market is Brazil, with 147.37 million users. Brazil accounts for 54 percent of the entire LatAm user base. In 2021, WhatsApp introduced WhatsApp Pay for users to conduct peer-to-peer (P2P) transactions. Following this success, and the demand for more payment options, WhatsApp has now launched a B2C service. To find out if social media communication platforms are the future of payments, we reached out to the industry for their expert opinion.

On March 6, 2023, WhatsApp was given the go-ahead Central Bank of Brazil to launch its business payment service. This will enable small businesses to talk to their customers through the app, and sell the goods directly to them.

In 2018, the app’s business model was launched in Africa and India. Due to the number of users, many small businesses found it easier to market their products through WhatsApp. It provided a lifeline for many of them during the pandemic. However, Brazil’s central bank did not authorize business payments when this was launched. In fact, it was not until 2021 that P2P transactions were authorized by the regulators.

During a 2021 survey in Brazil, around 38 percent of the WhatsApp users who responded said they were customers of Banco do Brazil, Nubankand or Sicredi and would like to use WhatsApp Pay. This was compared to 28 percent of customers who did not want to use WhatsApp Pay.

Enter the business world of payments

In November 2022, the first WhatsApp Business Summit in Brazil took place. There, Guilherme HornPhD, Head of WhatsApp LatAm, Meta, completed the first Brazilian business payment transaction. On stage, he showed step-by-step how the service would work using the Brazilian real.

During the event, brand Zuckerberg, head of Meta said: “We want to make it easier for people to get more done on WhatsApp. Part of that is building better ways to engage with businesses. And even though millions of businesses in Brazil use it to chat, we haven’t made it easy to discover businesses or buy from them. As a result, people end up using detours. The ultimate goal here is to make it so you can find, message and buy from a business in the same WhatsApp chat.”

Five months later, in collaboration with MasterCard, Visa, Heaven, Fiserv, Getnet Brazil, Mercado Pago and NestHorn announced the project’s green light on LinkedIn.

A sign of the times or a one-off exception?

To understand why this has been so anticipated, we reached out to the industry for their expert opinion.

No immediate direct competitors

In accordance Richard GardnerCEO and founder of Anthropic AIsales AI fintech: “Initially, WhatsApp was only allowed to go ahead for P2P payments, but that was not the end goal for WhatsApp.

“The goal was always to make this a B2C program that allowed local merchants to start accepting digital payments. It targeted those businesses without significant exposure to the digital payments market in an effort to make those businesses more competitive. It would also gaining their long-term loyalty in a way that cemented WhatsApp’s place in Brazilian society.

“This is a long-term process that will take some time to reach full fruition, but it is a huge gain. Both to the Brazilian economy and to WhatsApp, should the gambit pay off. Expect other apps to look at this kind of expansion, but I doubt they’ll launch as direct competition in Brazil. There are other countries with similar opportunities, including India, Nigeria and South Africa. This is in addition to others in Southeast Asia and South America.”

Creates the ultimate personalized payment experience

The importance of personalization cannot be underestimated according to Steve Madowvice president for product in paytech, Stax Payments: “Social media payments like WhatsApp’s new business payments service are a great example of embedding payments into a conversation that is already happening between businesses and consumers.

“This feature can be particularly effective for small businesses. It allows them to engage directly with customers and create lasting relationships through experiences. For example: providing customized product recommendations based on conversations within the platform. Offering tailored product recommendations can also help consumers feel themselves valued, and increase customer retention.

“A key aspect of these types of payments is that they adapt the payment experience in networks that consumers are already familiar with. However, social media companies need to create a space that consumers trust enough to make a payment with that platform. The trust aspect will be a big driver of adoption It also falls to the seller to have an engaging dialogue with consumers to make them feel confident enough to pay for something in this way.

“On the social media platforms, security is a huge element of trust. These companies need to double down on steps like verification if they’re going to start offering payments on their platform.

“Additionally, these payment options must be well built and work smoothly the moment they are rolled out. If a consumer’s first experience of paying for something through a platform like WhatsApp is negative, they are unlikely to pay that way again. So platforms that offer payments need to get it right from the start.”

Just the beginning

Lucio Vargasleader for Brazil in paytech, Unlimitedsays that this is just the beginning for communication platforms: “Although we have a significant percentage of the unbanked population in Latin America, we see more and more people going digital thanks to the arrival of fintechs that offer cheaper financial services.

“In addition, central banks in the LatAm countries are promoting open banking initiatives in different ways. This is a way to better support the needs of customers and businesses and also offer more inclusion.

“For this reason, more people are making payments online using the newly integrated financial system. According to a Global Findex Report of Global Bank, 73 percent of adults in Latin America already have a bank account. This is a global trend, and WhatsApp Pay is a service that, together with other payment methods, will complement this demand for fast and convenient payments.

“Just as there is room for WhatsApp Pay in Brazil, there are opportunities for other popular messaging apps or apps from other segments to offer payment services in more countries.