Update (February 12, 2018): WhatsApp has begun rolling out it’s UPI based payments feature in India. The feature has been made live on both Android and iOS. All users will not be able to see the feature yet as the rollout seems to be a phased one. However, the service gets activated after someone with access to the payments feature messages the user. After receiving a message, the other user should relaunch the app and Payments will reflect in WhatsApp’s settings.
Earlier (January 18, 2018): WhatsApp is reportedly set to launch a built-in payments feature by the end of February. A report on the Economic Times quotes unnamed sources saying, the messaging app is at various stages of integrating its Unified Payments Interface (UPI)-based payments feature with State Bank of India, ICICI Bank, HDFC Bank and Axis Bank.
According to one source quoted by ET, the platform is already in beta testing with one of its partner banks and that the product is expected to go live by the end February. The report also quotes a banker who said, security checks are being done to ensure the safety of the data. The final step following security checks in the integration process involves testing the product among select users before it can go live.
The Facebook-owned messaging app had received NCPI’s approval for UPI integration last July.
WhatsApp’s arrival on the payments scene could, at least temporarily, lead to a surge in usage of digital payments as it has to over 200 million monthly active users in the country.
WhatsApp will have UPI, now what?
What about VPAs?: It is also unclear if WhatsApp will be getting a financial address (Virtual Payment Address) of its own, something like username@whatsapp. Samsung Pay, despite being powered by Axis Bank, has its own UPI handle called @pingpay. The draft paper for the UPI said that it was technically possible to create a financial address. Alternatively, WhatsApp could allow a user to simply link an existing financial address from the user’s bank.
A payment pipeline: As Medianama had suggested earlier by going with UPI WhatsApp, can circumvent the regulatory headaches that come with setting up a payments bank or a digital wallet. By enabling payments from linked accounts to other linked accounts, whether to merchants or users, WhatsApp can essentially become the aggregator of users, enabling transactions between them. Now with 200 million monthly active users, WhatsApp is the largest peer-to-peer communication platform in India. The company could leverage this massive user base to scale its payments service rapidly.
Will this be monetised?: The norm with UPI is not to charge for peer to peer usage, HDFC bank tried but rolled back almost immediately. WhatsApp could enable merchant payments and charge a fee from merchants.In September 2017, the company had announced plans to integrate merchants on its platform while explicitly mentioning its aim to monetise this feature by charging the participating merchants. WhatsApp enabled transactional messages by opening up its API. Payments to merchants could receive the same treatment.
Is it all about the data?: Users having a WhatsApp issued VPA or linking their existing VPAs to their WhatsApp accounts, the platform could have access to a literal goldmine of data about spending habits, purchases and other monetary transactions of its users. To its parent company Facebook, this data itself could be worth more than any gains from monetising merchant transactions.
WhatsApp will have competition
While a 200 million plus monthly active user base is a great starting point, competition for the WhatsApp will be stiff. As Medianama mentioned in its monthly UPI transactions report, the battle for supremacy in the space is between Google’s Tez and the Flipkart owned PhonePe with the NCPI’s BHIM a distant third.
Google claimed that Tez accounted for 70% of all UPI transactions in October and November while processing a total of 140 million transactions between it’s launch in mid-September to December 5. Flipkart’s PhonePe reportedly processed 1 million transactions every day or 30 million in total in November. BHIM reported 9.1 million transactions in December.
The total volume of UPI transactions grew to 145 million in December 2017 from 105 million in the previous month. The total number of transactions in December were around 32.5 times higher than they were at the end of January 2017. The amount transacted increased by 36% to Rs 13,144 crores over November 2017. The amount transacted in December 2017 was 7.7 times higher than what it was in January 2017.
But the impressive numbers should be taken with a pinch of salt as PhonePe CEO Sameer Nigam pointed out that these are artificial as most new users are only doing P2P transactions worth Rs 1 in hopes of getting a cashback in their accounts. The reported arrival of WhatsApp on the scene could lead to a similar ballooning of numbers.