WhatsApp Payments live in India: Will it survive competition? 

Facebook-owned messaging app, Whatsapp has launched its payment option in India for both Android and iOS users. The feature allows peer to peer payments through UPI-based payments.  

Apurva Venkat Feb 12th 2018

WhatsApp now has an option that allows users to transfer money to other users within the messaging app itself. After rumors did round for a year now of WhatsApp starting a payment option, it is now live for various users. While the option of payments is available on both Android and iOS platform, it is being rolled out in a phased manner. This ideally means that the option is not immediately available to every user, however, once a user updates the application, or gets a message from another user who already has a payments option, only then will the user be able to see the option on the app. The peer to peer payment option uses UPI-based method for the transfer of funds. 

Advantages for WhatsApp

  • User base: 200 million.
  • Ease of use as the feature is within the app.
  • UPI-based transactions that are currently growing.

How does it work? 

The payment option is visible under the settings option on the app. On clicking of the payments option, the user has a host of banks listed such as Axis Bank, HDFC Bank, State Bank of India etc along with new age payment banks such as Airtel Payment Bank, Paytm Payments Bank, and Fino Payments Bank. The user has to link the bank account and verify the phone number through a one-time verification code sent via an SMS to the user. The user is also allowed to link multiple accounts on the app. Once done the user can start transferring the amount desired. Once the account is linked, transferring the money is as easy as sending a photo or video on the messaging app. 

Late entrant, but good scope

Considering the pace at which digital payments sector took off post demonetization, WhatsApp might seem like a late entrant to the party. Most users already use one or two available apps for digital payments and money transfer. Despite the delay, WhatsApp already has over 200 million active users in India. This user base could be a direct user base for the payments app. Another reason for a better scope is the ease of use, especially in the case of peer to peer transfers.

Whatsapp Payments is UPI-based, which has been picking up in India since October last year. According to the National Payments Corporation of India, in December 2017, BHIM had 9.1 million transactions worth Rs 3083 crore amounting to a growth of 10 percent in a number of transactions and 21 percent in the amount transacted in the previous month.  

Interestingly, this was also the time when internet giant, Google launched its payment app Tez, which claims to have had 140 million transactions in the month of October and November.   

Integration leads to greater scope

While the feature is currently only a peer to peer transfer option, in future this can be a monetization mechanism for the company. WhatsApp last month launched 'WhatsApp for business', also Facebook has launched its Marketplace in India. If the payments option is integrated to the other business options available on various platforms run by Facebook, this could open up various options of monetization for the company. 

Analyst’s view:

In a conversation with CIO India, DD Mishra, research director, Gartner put forth his views.

1) Despite being a late entrant Google Tez has got a good user base in the country. Would we see the same happening with Whatsapp?

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.

2) With the amount of competition, what could be the key features that might attract users to use Whatsapp payment option?

The key to success is around trust and convenience. If they can make it happen, there is a good possibility that they can give a tough competition.

3) What is the overall scope of UPI payments in India?

The opportunities around UPI payment is promising and it is already giving tough competition to wallets. With number of players in the market, UPI market is getting more crowded and we see 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.

4) Considering Facebook has started its marketplace and Whatsapp had recently launched its app for business ---going forward would there be an integration of these services?

Yes as it will create a lot of synergy if the marketplace and payment platforms are connected and this will make it more convenient to end users.