WhatsApp Pay is Giving the Chills to Indian Payment Wallet Innovators The National Payments Council of India has given its consent to roll out WhatsApp BHIM UPI beta version
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Months after Google's Tez's launch, Facebook has entered into India's payments industry through its messaging application WhatsApp in collaboration with the government's National Payment Council of India's (NPCI) BHIM-UPI platform.
But this isn't WhatsApp first attempt to enter the payments market if reports are to be believed.
According to an Indian business daily Economic Times, in 2017, the company was looking to develop a digital wallet. That didn't work out owing to the Reserve Bank of India's (RBI) reservations. The RBI wasn't sure of allowing foreign players into the domestic payments industry. And hence, WhatsApp chose the UPI route.
NPCI, in a statement, said, it has given its consent to roll out WhatsApp BHIM UPI beta launch with a limited user base of 1 million and low per transaction limit. Four banks will join the multi-bank BHIM UPI model in phases (in the coming weeks) and the full feature product shall be released after the beta test is successful.
Multi-bank model offers advantages such as transaction load distribution between banks and helps to integrate popular apps easily with UPI.
Naveen Surya, Chairman, Payments Council of India welcomes the move as an overall growth of the market from an industry perspective.
"Considering cash use in country more companies entering the business to digitize payments is absolutely great and well needed for our country. Currently, more business is for P2P hopefully but with players like WhatsApp, it may expand the P2M (person to merchant ) market as well," Surya told Entrepreneur India.
Presently, according to Credit Suisse, the India digital payments industry is pegged at $200m and is expected to grow fivefold to $1 trillion by 2023. It also said that the payments through Google's Tez are in part worth non-cash transactions recorded by Axis Bank, the fourth-largest bank in terms of digital transactions.
Considering WhatsApp has about 230 million users and is the favorite app among India smartphones users, the report said the payments industry in India is set to explode with payments options.
Vivek Saxena, Founder and CEO, Digicita Venture Studio agrees with the finding of the report and says the messaging application's simplicity, intuitive navigation and ease-of-use have made it the darling of teenagers and elders alike.
"The rapid adoption of its later offerings such as groups, voice & video calling and status is a testimony to that. If the past is anything to go by, the payments implementation too would be adopted by the consumers and change the way India makes P2P payments, which in my mind also includes payments to small merchants such as the kirana stores," he pointed out.
Should home-grown players be cautious?
Earlier this week, Vijay Sharma, Founder and CEO of India's largest payment wallet provider Paytm launched an attack on Whatsapp Pay via Twitter.
His tweet read: "After failing to win 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!"
However, rejecting all of Paytm's claims, the NPCI said, "We follow well-defined guidelines for BHIM UPI services with the objective of making our platforms interoperable and based on open standards, convenient and secure, offering multiple choices to consumers for rapid adoption for digital payments through banks and payment ecosystem players."
Sharma's concerns may prove to be legitimate.
The Indian smartphones space is a 500 million user market and Paytm has about 310 million registered users as against WhatsApp's 230 million users. Chances are that the latter will bite into the wallet industry's share.
However, Saxena believes the question to ask is will people prefer linking bank accounts to their WhatsApp accounts using UPI and make direct payments to each other or would they rather use a prepaid wallet implementation, like Paytm.
Competition is Imminent
Prabhu Ram, Group CEO & MD, Payswiff Solutions feels payment innovations are bound to happen in an evolving market like India. There are other companies who have invested a huge amount of money and resources in building technologies to reach out to people and making new payment options attractive, and effective way to transact in the market.
"Now at this point, it is time for everyone in this industry to be cautious- because the industry is evolving very fast and we can expect a lot of new innovations, technologies to emerge, which will also lead to a lot of upheavals," he pointed out.
Major payment wallets including Paytm and Mobikwik are yet to respond to Entrepreneur India's query on the story.