QA Financial Forum Chicago | 9 April 2024 | BOOK TICKETS
Search
Close this search box.

WhatsApp stirs up India with push into digital payments

whatsapp-pay-1569419926

Just 16 months after demonetisation forever changed the way Indians pay for things, WhatsApp is set to disrupt the market yet again. With more than 200 million Indians already using its messaging service, WhatsApp is piloting a payment service that lets them transfer money to each other. The well-timed move has riled rivals, who say the Facebook Inc. unit hasn’t adhered to security requirements and doesn’t link to other digital wallets. At stake is an Indian digital payments market that Credit Suisse Group estimates could be worth $1 trillion within five years and has homegrown and global players jostling for dominance. WhatsApp joins Google, Alibaba-backed Paytm, a unit of local e-commerce leader Flipkart and dozens of others already vying for customers as smartphone adoption surges. Mobile payments caught fire at the end of 2016 when the government’s demonetisation temporarily took 86% of all paper currency out of circulation to tackle corruption. WhatsApp Pay opened to rave reviews and the potential impact of its established user base has drawn comparisons with the way WeChat reshaped payments in China when it expanded beyond messaging. While it is still in a test phase and available only to a fraction of its Indian users, WhatsApp Pay is compatible with the country’s Unified Payments Interface – a digital payments system to facilitate real-time transactions, developed by the multi-bank umbrella body National Payments Corp. of India. A full rollout of WhatsApp Pay could come to all users as early as April, people familiar with the matter said, asking not to be identified. WhatsApp and NPCI declined to comment. WhatsApp’s pilot program is designed to work out teething problems and get user feedback, with the initial product being launched with ICICI Bank, India’s second-largest private sector lender. Any full rollout of the payments product would include all the features set out in the NPCI guidelines, ICICI said. The reception from rivals has varied from optimism that the overall market will grow to outright hostility at the newcomer. Critics have questioned the speed at which the NPCI permitted the pilot programme without ensuring it fulfilled requirements such as a log-in and compatibility with other digital wallets. Angry tweets “WhatsApp Pay could create a systemic shock, this could be another ‘demon’ moment for people-to-people payments,” Sameer Nigam, Founder and CEO of PhonePe, the payments unit of Flipkart Online Services, said using a local term for demonetisation. “This doesn’t mean they’ll kill everyone, this’ll help add the next 100 million mobile payment users.” One of the most outspoken critics has been Vijay Shekhar Sharma, Founder of Paytm Payments Bank. His start-up has been one of the biggest winners from demonetisation and Sharma fired off a barrage of angry tweets, claiming that WhatsApp had bypassed security requirements and that Facebook was trying to create a walled payments garden. [Bloomberg]