The Business Case Of WhatsApp While WhatsApp Pay may prove to be the icing on the cake, the messaging service has already transformed businesses of many sellers-through chat windows.

Bengaluru-based Shikha Gupta and her daughter Sonal sell customized cakes via WhatsApp. Customers send their requirements, discuss how they want the cake to look, and then place the final order—all on a chat window.

Guptas, founders of Le Gateau, started their business through WhatsApp in 2010, much before its standalone business platform—WhatsApp Business—was launched. Overtime they have expanded to selling pre-made cakes via food delivery apps, but the customized cake business stays strong on the chat app. "For orders of customized cakes, WhatsApp allows a hassle-free process wherein the customer can convey his requirements better," says Sonal. "We get about 50 orders in a day, of which 6-7 are for customized cakes."

For many small business owners like Guptas, WhatsApp has become a preferred channel to run their businesses. Involving a few clicks, and some typing, the easy to use user interface of the messaging app allows them to operate seamlessly and connect with customers directly. In two years since the launch of WhatsApp Business, the platform has about one million active users in India, which accounts for 20 per cent of the overall global user base.

Owing to its phenomenal success, the company is constantly adding new features to the app to improve user experience. It recently launched catalogs which act like a mobile storefront to showcase products and has taken the first few steps towards what it calls its fourth pillar—helping businesses get discovered.

"What we've heard from small business owners who are our regular users is that they need additional tools to engage with their customers, share important information, and increase sales and grow their business," a spokesperson for WhatsApp told Entrepreneur India.

The next step in this direction is WhatsApp Pay, which is expected to significantly decrease the friction that businesses face in taking payments.

Ankur Pahwa, partner and national leader, e-commerce and consumer internet at E&Y, believes the messaging app is already a mainstay for both consumers and small businesses and further integrates itself through the payments feature. "The experience of doing business on the messenger services is currently checkered, with the key missing component being payments feature to successfully integrate commerce though the platform. With the feature now being introduced, it should allow for a seamless, end-to-end experience without exiting the platform, that is, from providing catalogues to cashing in," Pahwa said.

Businesses, too, are excited about the idea of receiving payments in the same window. Take the case of Bengaluru-based Jethro Sajen, who sells burgers through social channels, including WhatsApp.

"To be able to take the order, send the bill and get the payment, all on one app sounds like a great deal," says Sajen, founder of Jethro's, who also owns a store now.

Currently, the payments feature is only available on the consumer app and not on the one that businesses use.

Responding to whether the feature could soon be introduced in the other app as well, the WhatsApp spokesperson said, "We believe WhatsApp has already and will continue to play a strong role in driving economic value for micro and small businesses across India."

Enabling Payments in India

The social media giant, Facebook, which owns Instagram and WhatsApp, has for long been trying to position itself as a key player within India's push for a digital economy.

"Our goal is to make sure every individual small business entrepreneur out there has the same opportunity and access to the same type of sophisticated tools that historically only the big companies have had access to," said Facebook chief Mark Zuckerberg during the company's post-earnings call in January.

And, why not? Since demonetization in November 2016, the digital payments landscape in the country has undergone a major overhaul. The government's flagship Unified Payments Interface (UPI) has witnessed maximum growth, with UPI transactions recording a new all-time high of 1.3 billion in February.

Currently, Google Pay, Flipkart-owned PhonePe and Paytm are the leading UPI apps. But all of that could change once WhatsApp gets permission to full-fledged launch payments owing to its huge user base of 400 million.

"WhatsApp Pay is likely to garner instant traction on the consumer front within hours of its launch. A lot of companies operating in the digital payments space will have to up the ante to stay at par with its offerings and adoption rate," said Akash Sinha, co-founder and chief executive officer at payment gateway provider Cashfree.

Some in the industry also believe this could open up opportunities similar to what WeChat did in China. "Like in China, WeChat has become a de facto channel for businesses to connect and conduct commerce with consumers, Whatsapp with pay and more mechanism to support commerce will be a game-changer in India," said Rajat Shikhar, co-founder and chief product officer at Jaipur-based social commerce firm DealShare.

Small businesses, too, share the same sentiment.

Madhav Krishna, founder and CEO, Vahan, a platform that connects blue collar job seekers with employers, says "WhatsApp Pay has the potential to give Paytm and Google Pay both a run for their money because the messaging app has a much higher engagement rate."

Vahan helps blue collar and low-skilled workers to discover jobs on Whatsapp. Currently, it charges employers for its services but soon plans to start charging job seekers as well for additional services. For this, WhatsApp Pay will come in handy, says Krishna.

"For job seekers, we plan to build a loan facility, sell insurance products and offer a resume building service. This falls in the peer-to-merchant category, so Whatsapp Pay will definitely benefit us," says Krishna.

WhatsApp Driving Social Commerce

The rise of WhatsApp, cheap Internet and a push towards digital payments has also led to the creation of several social commerce platforms in the last few years. Meesho, Mall91 and DealShare are all trying to bridge the gap that exists between early Internet users and online commerce.

In fact, Mall91 in its initial days used to redirect a potential transacting customer to a chat on WhatsApp where they confirmed their order. "They (people in smaller cities) already knew chats very well, hence the messaging checkout," Mall91 founder Nitin Gupta said in an interview earlier.

Meesho last year became Facebook's first equity pickup in an Indian start-up. The Bengaluru-based company, which has managed to raise over $200 million in funding so far, helps housewives, aspiring entrepreneurs and even students a platform to launch a virtual shop via Facebook, WhatsApp or Instagram, with zero investment.

According to a recent study—conducted across 11 countries—commissioned by global payments firm PayPal, 57 per cent of consumer respondents in India said they had purchased via social media in the last six months while 62 per cent of business respondents sold via this channel.

"Once the messaging platform becomes more integrated as an application, it will certainly disrupt some existing e-commerce platforms and solutions. With an already massive existing user base that the company can immediately capitalize on, it will certainly pose a threat to compete, who will have to morph and provide a better value experience to customers," says Pahwa of EY.

He adds most would need to collaborate. "They have 400 million users and it's the most active app in the country, and if you look at the WeChat playbook, WhatsApp has the ability to do that and more in India especially given that the other payments are yet to provide a more integrated experience."

Noida-based Mall91, which no longer redirects customers to WhatsApp having built a chat feature on its own app, is already working with the messaging service on enabling some of the business application program interface (API) use cases. "I think when payments come, it would be a natural extension to that," says Gupta.

For DealShare, Shikhar says it would primarily be used for both receiving payments from customers and making payments to suppliers and partners.

Safe Enough To Use?

Last year, WhatsApp faced flak over a reported data breach linked to Israeli spyware Pegasus. In India, it was said to have snooped into the phones of over a hundred users.

Shortly after the breach was reported, the Reserve Bank of India put a hold on the company's plans for a full-fledged launch for the payments feature citing data localization norms. Media reports last month said the service had received a nod from the National Payments Corporation of India to extend WhatsApp Pay to 10 million customers.

According to Rahul Tyagi, co-founder of cybersecurity firm Lucideus, one thing that WhatsApp needs to ensure is that the first level of security, where one has to put a code to open the app, is mandatory.

"Every app has a different approach to user experience and WhatsApp is more about convenience, but with the payments feature, I'm sure that they will make security a priority. The app pin/password/biometric authentication option is optional right now, and I'd recommend they make it mandatory," said Tyagi.

When we are looking at a humongous user base of 400 million users, vulnerability to attacks is also high. "The more people use a platform, no matter what security they have, the attack vector will increase," says Tyagi.

Cashfree's Sinha believes that as banks start exposing their APIs and extending additional digital touchpoints to consumers, it has the potential to be misused. "Along with creating the pipes for digital payment infrastructure, banks and digital payment platforms must ensure they are well-equipped to handle and eliminate fraud or other criminal breaches," he said.

Apart from the obvious focus on improving security, WhatsApp needs to take care of awareness among people, feels Tyagi. "If you see the history of attacks, you will hardly see any news item where a payment app got hacked. Usually the attacks are more people-centric where someone is duped."

The WhatsApp spokesperson says the company is doing its best. "Last year we stepped up our public reporting as part of our commitment to transparency and support for security experts that help protect people from similar threats."

Despite concerns, Vahan's Krishna still finds WhatsApp among the most secure apps.

He said, "Every app has some chink in their armor. I feel WhatsApp is one of the most secure apps out there in terms of encryption standards and data security. But I guess some hacker was able to find a loophole, and I'm sure WhatsApp is working very diligently to fix this and to put in the best practices."