After months of anticipation, WhatsApp, the online messaging service, officially has the payments app as a part of its features. The online messaging system rolled out this feature only to select users across the country and within the short time of its introduction, it has become one of the most popular features of this app.
However, this induction almost did not happen because of the company’s foreign origin. In fact, this was WhatsApp’s second attempt on this front. Last year, this messaging service had tried to partner with a private bank in the country to develop a digital wallet app to facilitate payments on its platform.
All was fine till the bank and WhatsApp went to the Reserve Bank of India. Multiple stakeholders of the Reserve Bank of India (RBI) was not ready to allow a foreign entity to enter India’s digital payments space. According to RBI guidelines, “Non bank entities applying for authorisation shall be a company incorporated in India and registered under the Companies Act 1956 / Companies Act 2013.”
WhatsApp is a Facebook owned company and Facebook is based in the United States. Ergo, this means this company could not directly enter the Indian online payments wallet. This was last year. What changed from then to now is the fact that Government actively started promoting the Unified Payments Interface (UPI) as part of its push to digitise India’s economy.
UPI allows for real time bank to bank transactions and once WhatsApp was sure this move was finalized, they jumped on the bandwagon. Facebook messenger service has had a decent run with the payments system and based on Facebook’s track record, the company decided to integrate this feature into WhatsApp as well. However, while this move came as a positive change for the messaging service, it brings to mind one important question.
Is this going to change the online payments game for banks and other companies? Is this service coming on board as a threat or as a new turn in the history of online payments? Consumer payments is a low margin game and is entirely defined by the scale of operations. On this front, WhatsApp has the potential to become a dominant game changer because of its base of 250 billion users all over the country.
Despite all its advantages, WhatsApp has one thing going against it. A little while after becoming live, the messaging service ran into a series of problems especially with Paytm raising a huge hue and cry about the safety of WhatsApp online payments. One bank which jumped on board with WhatsApp’s online payment feature is ICICI bank. India’s largest private sector bank was the first to team up with WhatsApp on this feature and it looks like the other banks are just minutes away.
With banks coming on board with WhatsApp’s new feature, it is interesting to see how two separate forces from different areas are coming together to create history for the first time. Clearly the times are changing and this move seems to be just one of those steps for an interesting future ahead.
