(Bloomberg) — Facebook Inc.’s WhatsApp messenger launched a payments feature in Brazil, the app’s second-biggest market with more than 120 million users.
Payments on WhatsApp will be free for users, whether sending to friends on the app or to pay a business for goods and services. The Facebook unit will charge business owners a fee for purchases and is partnering with Cielo SA, Brazil’s largest payments company, to process transactions.
WhatsApp has tested payments in a handful of markets over the past two years, including India and Mexico, but Brazil is the first where the service will go through a full-scale rollout of the feature. Facebook started a small test of the product in Brazil about a month ago, WhatsApp Chief Operating Officer Matt Idema said in an interview, adding that the country is among the leaders when it comes to people using WhatsApp to interact with merchants.
Payments are a key element of WhatsApp’s long-term plan to offer commerce within the app — and Facebook has been testing and building its payments product for the past two years. More than 5 million merchants around the world use a business version of the messenger app, and in countries like India and Brazil, WhatsApp serves as the main or only online presence for many mom-and-pop retailers.
WhatsApp wants to be the primary way these small businesses interact with their customers — a new version of email or a 1-800 number — and also serve as a storefront for users to buy products, Idema said.
Progress to date hasn’t been entirely smooth. In India, WhatsApp’s largest and most important market, regulators have pushed back against Facebook’s payments plan.
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Still, WhatsApp has started to push its commerce plans more aggressively after years of questions about its eventual business strategy. In April, Facebook invested $5.7 billion in Reliance Jio, the owner of some of India’s most popular digital services, including a commerce platform called JioMart. In early June, Facebook also revealed it had invested in Gojek, the largest startup in Indonesia, which has evolved from a ride-hailing service to a suite of digital services that includes payments.
Facebook’s investments have been geared toward helping WhatsApp better integrate into national economies and give the company more access to local merchants who might want to use the service.
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WhatsApp is relying on what Idema calls an “open partner” model for payments, too. “We want it to be possible for any person to send money to anyone or pay any business inside the app,” he said. “If that’s your vision, then to achieve it you have to have an open partner approach.”
Becoming a Facebook partner can be lucrative, at least in the short term. Cielo stock on Monday jumped about 35% after news of the WhatsApp arrangement. Rival payments companies StoneCo Ltd. and PagSeguro Digital Ltd. fell as much as 8.5% and 10%, respectively.
In Brazil, that approach means partnering with three banks: Banco do Brasil, Nubank and Sicredi. WhatsApp users who have accounts with any one of those banks will be able to add their Visa Inc. or Mastercard Inc. debit or credit card to Facebook’s payments system for use on the app. Facebook will charge merchants a 3.99% processing fee for accepting payments on WhatsApp.
Eventually, this system will also work across Facebook’s apps, Idema said.
Users who sign up for payments on WhatsApp will do so through the company’s Facebook Pay feature, which is also rolling out on Messenger and Instagram. Once Facebook makes it possible for users to send messages between all its services — a long-term project the company announced last year — they’ll also be able to send money between apps as well.
Payments on WhatsApp will be available to those in Brazil in the coming weeks and will expand to other countries soon, said Idema.
