It has been a fairly long wait to WhatsApp Pay in India. The Facebook-owned WhatsApp set the wheels in motion in the winter of 2018 when they requested the Reserve Bank of India (RBI) seeking approval to offer digital payments services to WhatsApp users in India. Just a few days ago, that journey has seemed to reach its logical conclusion. The National Payments Corporation of India (NPCI) has given the regulatory approval, which means you and I may soon be making digital payments on WhatsApp. As will more than 400 million other WhatsApp users in the country, in a phased manner—these official numbers are from July last year and would have only gone up in the subsequent period. Should the likes of Paytm, PhonePe, Amazon Pay, Google Pay and others be worried? Yes, that is the simple answer.
So, how does WhatsApp Payments work? It is quite simple, actually. Even more so if you are already a part of the 1 million users who already have access to this feature as part of a trial period. If you can see the Payments option in the Settings options in WhatsApp on your phone, you can proceed to link this with your bank account via the Unified Payments Interface (UPI). The authentication is done with the registered mobile number with your bank via SMS, and once that is complete, you can make and receive payments from other users from your bank account. Buying stuff at a store, online shopping, mobile bills, prepaid recharge or splitting the bill at a restaurant after a nice dinner with friends, WhatsApp Pay UPI will make all that simpler than it probably already is.
How incredibly easy and convenient for the 400 million or so WhatsApp users in India. No need to switch to another app to make payments. As Facebook says, “sending payments will be as easy as sending a message”. You will be able to make payments by scanning a QR code, send money to any UPI ID or do Money transfer to friends who have WhatsApp Pay. Expect online stores and offline shops integrate the WhatsApp Pay payments option in the months ahead.
Would it be fallacious to assume that most users would perhaps start using WhatsApp Pay by default? More so because WhatsApp is the default messaging app for a large demographic of the 400 million user base in India. To use any other payments app, including Paytm, PhonePe and Google Pay, you still have to head to a separate app. That’s another step. Another hurdle. It is worse in the case of Amazon Pay and Airtel Payments Bank for instance, because you need to dig for them in another app. Perhaps not, then.
India is just the start. The launchpad. Insights that will help later. Facebook has global ambitions with the digital payments’ product, something Mark Zuckerberg made very clear at the F8 conference keynote last year. Now factor in WhatsApp’s 1.6 billion user base (and growing) globally, and rivals are no doubt worried.
To be honest, the digital payments space in India perhaps needed this disruption. "When I look out at all the different ways that people interact privately, I think payments is one of the areas where we have an opportunity to make it a lot easier, that’s among the most important things that we can do here," Zuckerberg had said about WhatsApp payments, at the F8 conference last year.
Facebook has already made a submission to the Supreme Court of India that it would fully comply with the Reserve Bank of India (RBI) guidelines for payments apps, including the data localization norms.
Paytm, which is presently the most popular digital payments apps in India has around 250 million users. It plans to clock 12 billion transactions this year. It has also built a whole ecosystem of products around the payment’s app, including the Paytm First subscription bundle and the Paytm Mall shopping website. Once WhatsApp Pay rolls out fully in India, Facebook will have reached out to a WhatsApp user base which is already more than Paytm’s user base. That is before we even factor in how easy it will be for Facebook to make this common across its other apps too, including Messenger, which itself has 1.3 billion users globally.
The Flipkart owned payments service PhonePe has around 170 million users, as of late last year. Google Pay has more than 67 million users in India as of September last year. Amazon Pay on its part is beefing up the offerings by now adding the UPI option to iOS users as well—Apple iPhone users can now use UPI as a method for making payments, an year after Android users got the same functionality.
According to research firm McKinsey, the payments business would be worth $2 trillion by the year 2020. The Niti Aayog’s estimates suggest the digital payments space in India will be around $1 trillion by the year 2023.
The big advantage that WhatsApp Pay will have, as do other UPI based payment services, is the lack of effort required for the Know Your Customer (KYC) process for users. The regulations in India don’t require apps to do mandatory KYC for UPI transactions, since these are linked to the bank account of individuals, which are already KYC compliant. Earlier this year, the RBI extended its deadline for the physical KYC which mobile payment apps are required to do—Amazon Pay, Paytm and any other apps that allow your pay using a variety of methods including credit cards, have to mandatorily do a fresh round of physical KYC for all users who wish to continue using the services. No wonder then that Paytm and Amazon Pay are pushing UPI payments.