The National Payments Corporation of India, also known as NPCI, has certified another sixty (60) million WhatsApp users using UPI. WhatsApp will be allowed to extend the service to its 100 million users due to this certification, which is a massive success for a payment service that Meta hasn’t extensively promoted to consumers.
NPCI granted permission to increase its registered user base in UPI to 40 million in November 2021, up from 20 million a year earlier. Only 10 million consumers were authorized to utilize the digital payment capability before then.
According to industry insiders, WhatsApp has been attempting to get approval for the UPI payments capability for most of its Indian customers. With the new license, the instant messaging app will be able to reach 15–20 per cent of its overall user base through its UPI-based payments service. It has 530 million users in India as of February 2021.
While WhatsApp has continued to develop its payment capabilities regularly, the Facebook-owned [now Meta] firm has struggled to attract significant traffic since entering the UPI competition. According to NPCI data, WhatsApp only processed 2.54 million UPI transactions in March.
According to statistics from analytics company Sensor Tower, It has 6.27 billion worldwide installations to date, with India accounting for about 25%, or 1.55 billion.
PhonePe has retained its top position in the UPI ecosystem since December 2020, with 5.4 billion transactions conducted. According to NPCI statistics, it had a 46.7 per cent market share in the previous month. With 1,838.12 million and 729.6 million transactions, Google Pay and Paytm came second and third.
To prevent a small number of firms from dominating the UPI ecosystem, NPCI set a limit of 30% of the total UPI transaction volume for all third-party app providers. Existing companies like PhonePe and Google Pay, on the other hand, have been granted till the end of the year to comply with the rule.
So, how does this affect WhatsApp?
With NPCI’s approval, WhatsApp will be able to add 60 million users to its UPI service and compete with heavyweight competitors like Walmart-backed PhonePe and Google Pay, which control the bulk of UPI transactions. The NPCI, on the other hand, has guaranteed that WhatsApp’s capacity to distort the playing field is restricted, considering that the messaging app has over 500 million users and allowing its authorization to sell UPI services to all of them at once might affect competition.
However, it is understood that the corporation has sought NPCI permission to increase its payments to all of its customers without a limit. “We’ve been trying to create a simple, dependable, and safe experience for WhatsApp users since our original permission from NPCI,” Mahatme added, “with the hopes of accelerating adoption of UPI for the “next five hundred million” Indians.”
How will WhatsApp expand its payment platform in India?
In India, WhatsApp has around 500+ million users, and increasing the cap for the payment service all at once might result in exceptionally huge transaction volumes on the NPCI network.
Because it cannot manage the massive volumes that would eliminate the barrier, NPCI is exploring a progressive increase in the cap.
WhatsApp has been doubling down on establishing its payment service in India since September of last year.
Manesh Mahatme, WhatsApp India’s head of payments, said the company is phasing in the service in collaboration with the National Payments Corporation of India (NPCI). According to Mahatme, the emphasis will be on boosting marketing activities to raise awareness of the instant messaging app’s payment component.
The business added a rupee symbol to the chat composer next to the attachment and camera icons to make the payment service more apparent. It enabled users to scan QR codes and make payments across India’s 20 million shops using the camera icon on the WhatsApp home page.
Its ongoing attempts to improve its payment game seem to be paying off, as the number of transactions on its platform has steadily increased.
However, compared to PhonePe and Google Pay, WhatsApp’s percentage of India’s monthly payments is negligible.
Separately, on a rolling basis, NPCI limited the number of United Payment Interface-based transactions for third-party payment applications like PhonePe, Google Pay, and WhatsApp to 30% of the total volume of transactions completed in the previous three months. By January 2023, operators must comply with this standard.
What does this entail for the UPI ecosystem’s other players?
On a three-month rolling period basis, the NPCI has stipulated that no platform shall manage more than 30% of total UPI transaction volumes. However, it has given larger providers such as PhonePe, which had a 49% market share in terms of transaction value in March, and Google Pay, which had a 35% market share, until the end of 2022 to comply with the rule. So, although these competitors may continue to have a sizable market share till the end of the year, the increased clearance for WhatsApp and the necessity for others to limit their market share may result in a less lopsided market.
So, two of the most popular payment services, PhonePe and Google Pay, should be on high alert now that WhatsApp Pay may pose a danger to their businesses. Because millions of Indians already use WhatsApp for chatting, it would only take a tiny incentive to start using it for payments.
Journey of WhatsApp Pay in India
To offer its UPI-based payments service, the business has been embroiled in legal and regulatory battles with agencies like the RBI, NPCI, and even the Ministry of Electronics and Information Technology. WhatsApp was exposed to several requests from these businesses when authorized to pilot test its services with 1 million subscribers in February 2018. These demands included data localization, the existence of a local grievance officer, and the establishment of domestic offices.
According to an audit report WhatsApp filed to the NPCI, the business was able to comply with the RBI’s data localization guideline. WhatsApp was also sued by the Competition Commission of India for allegedly abusing its dominating position to launch WhatsApp Pay in India. Still, the case was rejected by the antitrust panel. The NPCI permitted WhatsApp Pay to increase its user base from the existing restriction of 20 million in November 2021.
Edited by Prakriti Arora