Bengaluru, November 21: Parent company Facebook announced the launch of WhatsApp Pay in India as competition in the sector grows. What does that change for WhatsApp users and can they all take advantage?
WhatsApp Pay Finally Live
It took WhatsApp more than two years of testing and trying to meet regulation standards before RBI gave it the green light. Last Friday, finally, the messaging platform went live with its integrated payment feature, prompting a statement from parent company Facebook's CEO Mark Zuckerberg, quoted as understandably excited to launch direct payment operations for its biggest user market.
WhatsApp Pay will exploit the Unified Payments Interface (UPI), one of the biggest success stories in Indian fintech ever since its introduction four years ago. The system's creators, the National Payments Corporation of India (NPCI), announced that initially WhatsApp will be allowed to grow in a "graded manner" up to a maximum user base of 20 million.
Fintech giants driving forward the Indian IT Ecosystem
WhatsApp India - with the company's only full country team outside of California - is the next global tech giant entering the direct payments segment dominated by Google Pay and PhonePe. Amazon Pay is also making its first steps but already growing significantly.
Despite the regulator's worries that WhatsApp might capitalize too quickly on its 400 million user base, the Facebook subsidiary has publicly insisted that its local partnership aid financial inclusion and economic growth. Those claims are not completely unfounded, of course, since fintech has dominated and driven forward the Indian IT, online retail and entertainment segments for a couple of years.
While WhatsApp Pay requires users to have a bank account to enable direct payments, UPI payments have already allowed many desi users to skip contact based card transactions and enjoy services they were excluded from in the past. Rural communities stay in touch with their families, friends play online Andar Bahar in India for the holidays as well as other games online at 7Jackport, local businesses engage with their customers better than before.
Digital payments were growing at an impressive rate even before COVID-19 related physical distancing concerns. Nowadays, they are indispensable for anything from e-retail to online entertainment and a fully integrated social experience. WhatsApp has already proven its worth as a platform for small online businesses and helped them survive some difficult months.
Despite hurdles, WhatsApp Pay is estimated to outgrow competitors
Naturally, it's never smooth sailing from the start, even for big tech companies. Striving to offer a more inclusive environment to many new online consumers simply means having to deal with the second largest unbanked population in the world, estimated at 190 million. While many users will be empowered by direct payments to peers and local services, others still cannot be bothered to part with old cash-only habits.
Nevertheless, WhatsApp can fall back on its dominant position and huge pool of loyal users. India has about 500 million mobile phone users and more than 2/3 of them use their services. Facebook alone boasts the largest global client base coming namely from the subcontinent. Recently WhatsApp bought into Jio Payments Bank and is currently partnering some of the largest banking service providers to ensure optimal UPI coverage.
Even when the RBI and the NPCI lift the initial limit of 20 million users and substitute it with a long-term ceiling of 30% of total Third Party payment volumes, in WhatsApp current number that would mean a neat 120 million. Such numbers lead many experts to think, however, that innovative horizontal integration might just help this fintech giant leapfrog the current Indian direct payment leaders Google and Walmart.