Paytm cries foul; NPCI directs WhatsApp to follow standard rules

WhatsApp recently announced its venture into payment banking system and amid this update Paytm founder alleges foul play by the former.

Prajeet Nair Feb 20th 2018

The founder of India’s largest digital payment system Paytm Vijay Shekhar Sharma has alleged that Facebook-owned messaging app WhatsApp’s UPI payment platform has security risks and is not in compliance with the guidelines.

However, after outcry and media attention, NPCI (National Payment Corporation of India) directed WhatsApp to follow the given guidelines by BHIM UPI services. The trial service by WhatsApp launched last week, and it doesn’t require a log-in or Aadhaar-based payments. WhatsApp has over 200 million users in India, the largest market for the messaging app.

PTI quoted Vijay Shekhar Sharma, founder, Paytm saying, “We are just seeking an equal treatment. WhatsApp payment does not ask for a log-in password, which is a huge security risk for consumers. While it (WhatsApp's payment) is in beta testing, we don't think there will be any changes added later."

Broad principles for interoperability like

  • Ability to send and receive money through any BHIM UPI ID.
  • Intent and collect call.
  • Read and generate BHIM / Bharat QR code are required in final BHIM UPI app.
  • BHIM UPI enabled app which fulfills such principles only will be permissible for full-scale public launch.

Sharma said he will approach the National Payments Corporation of India (NPCI), which has developed the UPI system, and even higher authorities to highlight this issue.

He alleged that Facebook had "arm-twisted" UPI to derive the benefit. In a tweet, Sharma had tweeted, "After failing to win a war against India’s open internet with cheap tricks of free basics, Facebook is again in play. Killing beautiful open UPI system with its custom close garden implementation. I am surprised, champions of open @India_Stack, let it happen!”

The mobile wallet industry in the country has been evolving each day, and right now it is in an interesting stage. UPI payments will have an upper hand if it continues to remain free and provide better security, convenience and add more value-based services.

Talking about the whole UPI payment scenario, Gartner’s Research Director, D.D. Mishra said, “The opportunities around UPI payment are promising and it is already giving tough competition to wallets. With the number of players in the market, UPI market is getting more crowded and we see the possibility of consolidation in next 2-3 years. However, UPI will remain attractive to consumers and WhatsApp getting into this space will make it even more competitive.”

He said, “WhatsApp has an excellent user base and it will not be a surprise if it helps in gaining customers for them for digital payments. They can give a tough competition depending on how they can make it convenient for end users and leverage the existing user base. The key to success will be around trust and convenience. If they can make it happen, there is a good possibility that they can give tough competition.”

The increase in the digital transaction has been a game changer for the Indian banking system, the transition of the Indian banking sector to a cashless society is creating many opportunities of technology investments into digital payments infrastructure, and according to Gartner, Inc. IT spending in banking and securities firms in India will increase 11.7 percent to reach USD 9.1 billion.

NPCI directs WhatsApp; given limited users of 1 million

A statement released by NPCI said that it has currently given its consent to roll out WhatsApp BHIM UPI beta launch with a limited user base of 1 million and low per transaction limit, during beta testing.  

Four banks will join the multi-bank BHIM UPI model in phases and full feature product shall be released after the beta test is successful.

Multi-bank model offer advantages such as transaction load distribution between banks and helps to integrate popular apps easily with BHIM UPI.

It is expected, that WhatsApp will launch its full version by March end.