WhatsApp, which began testing its payments service in India with 1 million users in early 2018, has finally started to expand the feature to more users in the world's second largest internet market.
The Facebook -owned service said Friday that it is rolling out payments in ten Indian regional languages in the latest stable version of WhatsApp app on Android and iOS. The announcement comes hours after National Payments Corporation of India (NPCI), the body that operates the popular UPI payments infrastructure, said that it had granted approval to WhatsApp to roll out UPI-powered payments in the country.
Like Google, Samsung and a number of other firms, WhatsApp has built its payments service atop UPI, a payments infrastructure built by a coalition of large banks in India. NPCI said WhatsApp, which has amassed over 400 million users in India, can expand payments to its users in a "graded manner," and to start with, it can only roll out the payments service to 20 million users and has to work with multiple banking partners. (WhatsApp said today it is working with five leading banks in India: ICICI Bank, HDFC Bank, Axis Bank, the State Bank of India, and Jio Payments Bank.)
Google and Walmart currently dominate the mobile payments market in India, together commanding roughly 80% of the UPI market share. UPI has emerged as the most popular digital payments method in India, thanks in part to New Delhi's abrupt move to invalidate more than 85% of the paper cash circulation in the nation in late 2016. UPI's popularity has diminished the relevance of several firms in India, including SoftBank and Alibaba-backed Paytm that spent years building mobile wallets. Unlike UPI apps, mobile wallets are not interoperable with other mobile wallets, and levy a small fee to consumers.
"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," said Mark Zuckerberg, chief executive of Facebook, in a video posted Friday.
WhatsApp's payments rollout in India in early 2018 quickly ran into a two-and-a-half-year regulatory maze as various bodies in the country expressed concerns over users' payments data and whether the Facebook-owned service wielded too much power and advantages over other payments apps. You can read more about this here (paywalled).
While WhatsApp has been cleared of those concerns, industry veterans believe the payments service on the app -- more popular than any other smartphone app in the country -- will see a much faster adoption than its rivals as all its potential users are already using it for chatting with friends. (Google launched a standalone payments app in India, for instance.)
NPCI's announcement today comes minutes after it said it would be enforcing a cap on third-party apps to ensure that no single app processes more than 30% of all UPI transactions in a month. It's evident that WhatsApp has already suffered too much because of regulatory troubles in India, its biggest market by users. But NPCI's plan to enforce limit on other apps should help WhatsApp in some way eventually -- though return to bite again later.
At stake is India’s mobile payments market, which is estimated to reach $1 trillion by 2023, according to Credit Suisse. Today's announcement would also help WhatsApp, increasingly looking to diverse into more businesses, make a further push into the mobile payments market.
It rolled out payments in Brazil in June this year, but was quickly ordered to suspend the service by the nation's central bank. Brazil’s central bank said it took the decision to "preserve an adequate competitive environment" in the mobile payments space and to ensure "functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap." Luckily in India, UPI is fast, open, interchangeable, cheap and, to a large extent, transparent.
Facebook itself has made a big push in commerce in the past year. And if WhatsApp gains traction with payments, it could open more avenues for its parent firm. Facebook is aware: Earlier this year, the social juggernaut invested $5.7 billion in Indian telecom giant Jio Platforms, the largest foreign direct investment in the technology space in India. Facebook executives have said that they plan to work with Jio Platforms to explore ways to digitize India's 60 million small and medium-sized businesses. Jio Platforms is run by Mukesh Ambani, India's richest man. Ambani is also a close ally of Indian Prime Minister Narendra Modi.
WhatsApp has also added a range of commerce features to its platform in recent years.
The story was updated throughout with additional details.