MAKE IT RAIN

A million Indian users are testing out WhatsApp’s payments feature

Quartz india
Quartz india

Already the largest messaging app in the country with over 200 million active monthly users, WhatsApp has over the past few months quietly rolled out its payments feature to a select few.

With almost a million users on board by now, WhatsApp is currently fixing bugs and building features, sources told Quartz, adding that no date has been fixed for a launch. The beta testing commenced in February this year, months after rumours of the December 2017 launch turned out to be false.

WhatsApp’s payment gateway is based on the unified payments interface (UPI) of the National Payments Corporation of India (NPCI), cutting out the cumbersome intermediary step of loading money onto a wallet. Instead, users can transact directly from their bank accounts using a virtual ID.

The Facebook-owned messaging app has its eye on India’s flourishing e-payments pie, slated to grow five-fold by 2023 to $1 trillion, according to investment bank Credit Suisse. However, due to compliance issues, the company has thus far been slow in making inroads. First, it required government permission to tie up with banks in the country. Then, in April, the Reserve Bank of India (RBI) issued new norms instructing payments companies to store data locally.

In April, WhatsApp floated an advertisement for an India head. This was yet another signal that it is getting serious about the India opportunity, including making headway in payments, according to analysts.

Even before its full-fledged debut, WhatsApp has sent ripples through the industry, unsettling both newcomers and incumbents.

Payments disrupted

The messaging behemoth’s entry into the payments segment could stifle upcoming players. Most e-wallet operators in India are anyway not profitable yet. Now the government’s introduction of UPI poses a threat for smaller companies while helping the ones with deep pockets, like Google Tez, and soon WhatsApp. UPI is eating into wallets because while essentially they both serve the same purposes, UPI is easier to use since it’s directly linked to bank accounts. And there are more bank account-holders than those who use wallet apps.

Also, given WhatsApp’s huge user base, introducing the payments feature could help it lock customers within its ecosystem. If friends or family ask for money, a user can easily make that payment from within the app without switching screens.

On WhatsApp, such a feature holds the promise of going beyond peer-to-peer payments since many businesses have already found a home on the platform. Travel bookings and movie tickets are often sent to customers via the chatting app. Offline retailers have moved from SMSes to WhatsApp messages to relay promotions. And considering UPI’s transaction limit is a massive Rs1 lakh ($1,470), bigger ticket sizes won’t deter users either.

Even market leader Paytm seems shaken. Last November, the digital payments company moved to level the field with WhatsApp by adding a messaging feature to its app. Days after WhatsApp began testing payments, Paytm founder Vijay Shekhar Sharma lashed out on Twitter, alleging WhatsApp was trying to monopolise and cannibalise the market. He compared it to Facebook’s Internet.org experiment—a limited-internet proposition India firmly rejected two years ago.

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