WhatsApp takes on mobile money market with launch in India

Tuesday 27 February 2018 | 16:33 CET | Background

WhatsApp has launched a "full feature" inter-bank money transfer service in India. The launch follows a short trial period involving a million users. The service uses customers’ phone numbers linked to bank accounts to enable payments. Several banks have joined the United Payments Interface (UPI), which powers the payments service, and ICICI Bank processes the fund transfers on WhatsApp. The new service will face competition from established mobile money players such as Paytm and Mobikwik. 

Early in February the National Payments Corp of India (NPCI, the body set up by the central bank and lenders to oversee payment service) announced that WhatsApp had started beta testing a money transfer service with the intention to launch a full product. The United Payments Interface used has been set up as real-time payments system that enables digital transactions between banks without the need to input any codes or other bank account details. All users need to do is make sure that their mobile number is linked to their bank account(s).

WhatsApp payment: very simple P2P money transfer tool

According to India Today, WhatsApp users on the latest version of Android (2.18.46) should see the Payment option by tapping on the Attachment icon in the text bar or in Settings. Tapping on the Payment icon will start the setup process. After selecting your bank, WhatsApp will show you the accounts that have been linked to your phone number. Then the customer has to set up a UPI PIN. Once that is set-up, customers can use the service with all their WhatsApp contacts, provided they are Android users who have also set up the payment service. As around 80 percent of phones in India use Android, the lack of iOS compatibility won’t hamper many consumers. 

The maximum amount which can be sent is INR 5,000 (EUR 62.50). A user knows that the money has been sent once the two ticks are shown, while the recipient gets a notification. A message from the bank via SMS or email should also be received. This offers a very simple way for people to transfer money to friends or family. 

Alongside established mobile payment players in India such as Paytm and Mobikwik, more players have recently entered the market. Google launched Tez in September 2017 and gained nearly 12 million active users within its first three months, and Samsung started Samsung Pay in August 2017. Mobile payments are however still in their infancy in India, where according to the World Bank 97 percent of retail transactions are conducted in cash or by check.

WhatsApp has large base to target, but will need to expand service

India is an important country for WhatsApp, where it reportedly counts around 200 million users (out of a total of around 300 million smartphone users and 1.3 billion inhabitants). It’s Whatsapp’s first entry into payments, although parent company Facebook has been experimenting in the US with payments via Messenger.  

Starting with money transfer is a simple way to test the waters for WhatsApp. If the beginning is successful, it is likely that it will extend the range of its services to bill payments and merchant payments in the future as it needs to compete with the other players in the market. WhatsApp could ultimately also integrate its payment feature into its specific app for small business. WhatsApp stated in January 2018 that over 80 percent of small businesses in India and Brazil say WhatsApp helps them both communicate with customers and grow their business. It would need however to expand the payment options beyond UPI and P2P payments, as well as set up some basic features (small) businesses will need, such as generating invoices or sales reports. 

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