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How WhatsApp’s Payment Arena Could Change Indian Banking Forever?

Recently, WhatsApp rolled out its Payment features to some selected group of users across the country. Although, it didn’t receive much enthusiasm in response because of its foreign origin, but it did generate some heat.

It was WhatsApp’s second attempt. Last year, tried to partner with a private bank in India to develop a digital wallet app to facilitate payments. That time Reserve Bank of India was not ready to allow a foreign entity to enter India’s digital payments arena.

“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 owned by Facebook, located in the United States, therefore could not directly enter the Indian payment market.

Meanwhile, it has brought an important transformation in India. The Government actively promoting the Unified Payments Interface as a part of its cashless economy. It allows real-time bank-to-bank transactions, put up fewer entry barriers and foreign entities including Google.

Facebook has a decent experience of introducing Payment options through its messengers in United Stated, it wanted to bring the similar kind of option in India as well.

WhatsApp payments, however, throws up new challenges for existing payments companies, mobile wallets and banks to hold on to their market shares.

Add-on Advantage

Consumer payment is a low-margin game and the business is completely defined by the scale of operations.

On this front, WhatsApp could emerge as the dominant player because of its has more than 250 million users in India. Moreover, the ease of use of WhatsApp’s payments feature can only attract more people to adopt digital payments.

Furthermore, WhatsApp’s user interface has received rave reviews on social media, including from payments companies.

Challenges

Soon after WhatsApp’s payments feature became live, the waters became murky with Paytm raising issue about the safety of the WhatsApp payments platform. Paytm CEO Vijay Shekhar Sharma also alleged that WhatsApp was given too much leeway to ensure better payments experience for customers.

It is because of WhatsApp’s large user base that NPCI has not allowed a full-scale launch of the company’s payments feature. It instead preferred a phased rollout to allow time for both the app and bank platforms to adjust to a sudden spike in volumes.

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