WhatsApp to launch payments service in India; Secures approval

By Rahul Vaimal, Associate Editor
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After numerous regulatory hurdles, WhatsApp has finally gained approval to launch its payments feature in India

WhatsApp, the popular messaging app, which began testing its payment service with 1 million users in India in early 2018, has finally begun to expand the feature to more users in the second largest internet market in the world.

The Facebook-owned service said that in the latest stable version of the WhatsApp app on Android and iOS, it will be rolling out payments in ten Indian regional languages. The announcement comes hours after the body that regulates the popular UPI (Unified Payments Interface) payment infrastructure, National Payments Corporation of India (NPCI), said it has granted WhatsApp approval to bring out UPI-powered payments in the country.


WhatsApp has developed its payments service upon UPI, a payments system built by a group of large banks in India, just like Google, Samsung and a host of other companies. NPCI said that WhatsApp, which has gathered more than 400 million users in India, will “gradually” expand payments to its users and, to begin with, can only carry out the payment service to 20 million users and has to work with multiple banking partners.

WhatsApp informed that it is working with five of India’s leading banks including ICICI Bank, HDFC Bank, Axis Bank, State Bank of India and Jio Payments Bank for the same.

The US-based technology giant’s GooglePay and PhonePe, owned by American retailer Walmart, currently dominate India’s mobile payment market, together commanding approximately 80% of UPI’s market share. UPI has emerged as India’s most successful digital payment method, thanks in part to the abrupt move by the country to invalidate more than 85 percent of the nation’s paper cash circulation in late 2016.

The success of UPI has reduced the importance of several companies in India, including SoftBank and Alibaba-backed Paytm, which had spent years developing mobile wallets. Mobile wallets, unlike UPI apps, are not fully compatible with other mobile wallets and charge customers a small fee.

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Mark Zuckerberg
CEO – Facebook

“With UPI, India has created something truly special and is opening up a world of opportunities for micro and small businesses that are the backbone of the Indian economy. India is the first country to do anything like this. I’m glad we were able to support this effort and work together to help achieve a more digital India. I want to thank all our partners who’ve made this possible. When people can access financial tools, they’re more empowered to support themselves and others, or start a business. Long term, we need more innovation that gives people control over their money, and making payments easier is a small step that can really help.”

Continuing concerns

The rollout of WhatsApp payments in India in early 2018 rapidly ran into a two-and-a-half-year regulatory struggle as different organizations in the country raised concerns about the payment data of users and whether the Facebook-owned service exerted too much control and benefits over other payment apps.

Although WhatsApp has been cleared of these concerns, industry veterans claim that the payment service on the app, more popular than any other mobile app in the country, would see a much faster acceptance than its competitors as it is already used by all its potential users to communicate with friends.

The announcement from NPCI came minutes after it said that a limit on third-party apps will be introduced to ensure that no single app handles more than 30 percent of all UPI transactions in a month. It is clear that WhatsApp has already suffered much in India, which is its largest consumer market, due to regulatory difficulties. But the proposal of NPCI to impose limitations on other apps is likely to eventually support WhatsApp in some way, but may cause trouble later on.

Growing market

According to data, India’s mobile payments market is expected to hit $1 trillion by 2023. The latest announcement will also allow WhatsApp, who is increasingly looking to diversify into more sectors, to make a further step into the market for mobile payments.

In the past year, Facebook itself has made a big push in commerce and it might open more doors for the company if WhatsApp gains traction with payments. Facebook had invested $5.7 billion earlier this year in Indian telecom giant Jio Platforms, India’s largest foreign direct investment in the technology space. Facebook executives have said they want to collaborate with Jio Platforms, operated by Mukesh Ambani, to explore ways to digitize the 60 million small and medium-sized businesses in India.

In June this year, WhatsApp had rolled out payments in Brazil, but was soon ordered by the nation’s central bank to suspend the service. The central bank of Brazil said it took the decision to “preserve an adequate competitive environment” in the mobile payment space and to ensure “the functioning of an interchangeable, fast, secure, transparent, open and cheap payment system.” Fortunately, UPI is fast, open, interchangeable, cheap and, to a large extent, transparent in India.