WhatsApp receives approval to expand its payments service in India
WhatsApp, which began testing its payments service in India with 1 million users in early 2018, can finally start to expand the feature to more users in the world's second largest internet market.
National Payments Corporation of India (NPCI), the body that operates the widely popular UPI payments infrastructure, said on Thursday evening that it has granted approval to WhatsApp to roll out UPI-powered payments in India.
Like Google, Samsung, and a number of other firms, WhatsApp has built its payments service atop UPI, a payments infrastructure built by a coalition of large banks in India. NPCI said WhatsApp, which has amassed over 400 million users in India, can expand payments to its users in a graded manner" and to start with, it can only roll out the payments service to 20 million users and has to work with multiple banking partners.
A WhatsApp spokesperson in India did not immediately respond to a request for comment.
Google and Walmart currently dominate the mobile payments market in India, together commanding roughly 80% of the UPI market share. UPI has emerged as the most popular digital payments method in India, thanks in part to New Delhi's abrupt move to invalidate more than 85% of the paper cash circulation in the nation in late 2016. UPI's popularity has diminished the relevance of several firms in India including SoftBank and Alibaba-backed Paytm that spent years building mobile wallets.
WhatsApp's payments rollout in India in early 2018 quickly ran into a two-and-a-half-year regulatory maze as various bodies in the country expressed concerns over users' payments data and whether the Facebook -owned service wielded too much power and advantages over other payments apps. You can read more about this here (paywalled).
NPCI's announcement today comes minutes after it said it would be enforcing a cap on third-party apps to ensure that no single app processes more than 30% of all UPI transactions in a month. It's evident that WhatsApp has already suffered too much because of regulatory troubles in India, its biggest market by users. But NPCI's plan to enforce limit on other apps should help WhatsApp in some way eventually - though return to bite again later.
At stake is India's mobile payments market, which is estimated to reach $1 trillion by 2023, according to Credit Suisse.