WhatsApp Pay closes in on long anticipated India launch

Written by || March 12 2020

The India digital payments market makes for a fascinating contrast to China's. Unlike China, India has allowed foreign tech giants to compete on a mostly level playing field against its homegrown firms. In fact, Chinese tech giants are strategic investors in some of those Indian fintechs. Competition in the surging Indian payments market - Credit Suisse reckons it will grow fivefold to US$1 trillion by 2023 - is fierce. Google Pay is the market leader followed by Walmart-backed PhonePe according to research firm Razorpay. India's own Softbank-backed Paytm has fallen behind. AmazonPay is also vying for market share.

Entering into this fray is WhatsApp Pay, the digital wallet of the global messaging giant. WhatsApp Pay is aiming to do what in India what WeChat did in China: Segue from chatting and photo sharing into digital banking on the back of a popular messaging app. The difference is that WhatsApp Pay has a lot more competition. The only major digital wallet WeChat faced was Alipay. Interestingly though, WhatsApp has about as many users in India - 400 million as WeChat had when it expanded into digital banking in 2014. Today, WeChat has more than 1 billion users, mostly in China.

In February 2018, WhatsApp Pay launched a trial run of its services in India, offering them to a million users in a partnership with India's ICICI Bank. During a February earnings call, Facebook chief executive Mark Zuckerberg said that the India test run was a success, auguring good prospects for a wider rollout. "And when so many of the people kept using it week after week, we knew it was going to be big when we get to launch," he said.

WhatsApp Pay had sought to launch in India in 2019, but the rollout was reportedly delayed when the company balked at local data storage requirements. However, in February, Indian media reported that WhatsApp Pay had been given the go-ahead for a phased rollout. The company needed to secure approval from both the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI).

“If WhatsApp is able to fulfill the compliance requirements, the messaging platform will be able to do a full roll-out,” an anonymous source told India's Business Standard.

WhatsApp Pay has not commented publicly on why it has chosen a phased launch of its payment service in its largest market. Some analysts say that the company wants to gradually scale the payment business in India, offering it to an increasing number of users as infrastructure is put in place to facilitate the growing transaction volume.

Besides its large user base, WhatsApp Pay will also benefit from operating on India's state-backed Unified Payments Interface (UPI) platform. UPI transactions jumped 183% year-on-year to 2.7 billion in the third quarter of 2019, according to research by French financial services company Worldline.