WhatsApp’s entry into the Payments Arena

        WhatsApp has started rolling out its peer-to-peer payments feature for its users in India. Currently it is in a testing phase and is available to a small number of beta app users only. It is looking forward to provide the customers, seamless messaging as well as the ease of real time money transfer, as the feature is based on the Unified Payments Interface system, which is made by National Payments Corporation of India. UPI allows money transfer directly into bank accounts at zero cost, without any hassles of entering bank account numbers, passwords or pins.  The payments war will intensify as WhatsApp will compete with major players in the payments market such as Paytm, PhonePe, BHIM, Google Tez, etc. This comes after the recently launched WhatsApp Business, an app that allows businesses to manage its customers. It is evident that WhatsApp wants to expand its foray into the business world.

            Now about the competition; the major player in this field is Google Tez, which is accountable for almost 73% of all the transactions based on UPI. Google has been providing cashbacks directly into bank accounts to lure the customers. Paytm has 280 million registered users on its platform, and it has also been providing cashbacks to the users in their paytm wallets to encourage more and more users to use UPI. It is yet to see what Whatsapp will do to attract and encourage it users to use its payments service, but it is clear that digital payments will get a boost due to WhatsApp’s tremendous reach of around 200 million users in India.

           WhatsApp’s entry into payments war shows that the growth in the Fintech sector is evident and is witnessing a new boom. Fintech is said to be the most disruptive sector and has a promising market in India. It is estimated that digital payments will grow 10 times from $50 billion to $500 billion by the year 2020. India can’t become a cashless economy immediately in the near future but this boost in digital payments sector could be a great start. The transition into a cashless economy is a more of a revolution than just a technological change.

           WhatsApp currently has Facebook’s back and widespread reach as major advantages, and the number is growing rapidly with increase in smartphone and internet penetration in India. The growth would support the company to focus on developing markets and bring more improvements in the features and provide better services.

About the Author

This article has been prepared by Mr. Hriday Gandhi and published by Yatendra Varma, pursuing MBA from Institute of Management, Nirma University located in Ahmedabad, India.

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