The Director of Organization of the Financial System and Resolution of the Central Bank, João Manoel de Mello, commented on the current concerns of the introduction of Big Techs (giants such as Facebook, Google, Apple, Microsoft and Amazon) in the Brazilian payments sector.
The blocking of WhatsApp’s payment activities demonstrated that the entity seeks to assess the consequences of these new members and solve the regulatory challenges of the new competition. In addition, the rapid blockade by the entity served as a kind of message for all Big Techs: whoever wants to enter the financial sector, will have to compete fairly, without drowning fintechs or local banks.
The abrupt suspension of the payment feature implemented by Facebook on Brazilian WhatsApp caused discomfort in the app’s user base. However, the blockade was not to protect the Central Bank or the long-awaited PIX, according to the BC, but to get time to do a study on the profound impacts of the entry of new competitors.
“That was the logic, it is not to prevent anyone, to protect PIX, it is not to protect a large bank, quite the contrary,” said Mello in a live broadcast by BTG Pactual. The director states that the entity appreciates the entry of new competitors, but that it is important that regulators guarantee fair competition conditions.
The introduction of bigtechs has the potential to generate exponential growth in social inclusion, efficiency and competitiveness in the financial sector. However, the lack of specific legislation for this activity creates risks to the financial system. For Mello, cyber threats are what “take your sleep away”, reiterating that this is one of BC’s concerns.
In June, the Central Bank declared in a note that it is aware of any closed system that could create obstacles in its objective of creating a “fast, secure, transparent, open and cheap system” – referring to the PIX.
As soon as WhatsApp payments were released in Brazil, the BC had already admitted that Big Techs are a major regulatory challenge. By suspending the activity of the resource, the BC acted not only against Facebook, but all the bigtechs interested in slices of this market in Brazil. “The BC is going to make specific analyzes of the bigtechs. This became very clear not only in the WhatsApp suspension note, but also in the circular – released by the regulator.
Currently, the WhatsApp payment system is being gradually released and can be tested by payments in Visa and Mastercard, but with low values and for a limited amount of cards.