WhatsApp is finally adding a long-awaited payment functionality.

WhatsApp, the messaging app owned by Facebook (NASDAQ: FB) has launched a facility to make digital payments for users in Brazil. The announcement came Monday on the WhatsApp blog.  Users can now send money to other users, or local businesses, from inside a chat. (Reuters)

Facebook bought WhatsApp in 2014 for about $19.3 billion. The social media and messaging app became the world’s most popular messaging application by 2015. It has over two billion users worldwide in 2020.

“Payments on WhatsApp are beginning to roll out to people across Brazil beginning today and we look forward to bringing it to everyone as we go forward,” the company said.

Brazil (and India) are WhatsApp’s largest markets

At 400 million monthly active users, India accounts for WhatsApp’s largest market.

Brazil is second-largest with 120 million, and many of these are small businesses. They use the app for marketing – including quotations, brochures, and answering customers’ questions.

“WhatsApp is heavily used there, both by people and small businesses,” Matt Idema, chief operating officer of WhatsApp, said of Brazil to Reuters. “We think we can help grow digital payments, help grow the digital economy with small businesses, and help support financial inclusion.”

COVID-19

The digital payments rollout by WhatsApp in Brazil is timely amidst the lockdown restrictions due to the pandemic. People may be more inclined to use a digital method to pay somebody rather than in cash. Shut-in customers are also likely to buy things from local businesses using online transfers of money.

How it would work

Users need to link up their account to a Visa or Mastercard credit or debit card issued by local partners such as Banco do Brasil, Nubank, and Sicredi.

The system will use Facebook Pay and Cielo, the leading payments processor in Brazil, and require a special six-digit PIN or fingerprint for security purposes.

Facebook Pay is a payments service that works on Facebook and Instagram. It was launched last year and is being used for the first time on WhatsApp.

WhatsApp Pay will be free for using to make purchases and send money. Facebook will charge a 3.99% processing fee per transaction to businesses.

India

Facebook is still wrestling with regulatory formalities to launch its payments service in India. However, the app is likely to use the Unified Payments Interface (UPI) in the country rather than Facebook Pay.

Facebook recently invested $5.7 billion for a 9.99% stake in cut-price Indian mobile internet company Reliance Jio, which is owned by the country’s richest person Mukesh Ambani.

At the time Facebook said it plans to focus on the collaboration between WhatsApp and Reliance’s e-commerce venture JioMart to enable people to connect with businesses, shops, and purchase products.

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