WhatsApp gets a nod from NPCI to launch payments service in India

The National Payments Corporation of India has permitted Facebook-owned WhatsApp to launch its payment service, WhatsApp Pay, in India. Hours after NPCI’s announcement, the company also announced that it is rolling out WhatsApp Pay in India. The service will be available in 10 Indian regional languages in the latest stable version of WhatsApp on Android and iOS.

Like Google or any other payments app, this service is also built atop UPI which is a payments infrastructure built by a coalition of large banks in India. NPCI said that the service can expand among users in a graded manner. To start with, the company can only offer it to 20 million of its 400 million users. Also, it is required to work with multiple banking partners within the country. Hence, it is working with the country’s five leading banks – ICICI Bank, HDFC Bank, Axis Bank, The State Bank of India and Jio Payments Bank.

WhatsApp Pay’s history in India

WhatsApp would have launched much earlier in India. The company even began testing its payments service in India in February 2018, which was limited to one million users in the country. However, the social media giant had to put it on hold in August 2018 because of the pending regulatory approvals.

Also, the government was concerned about its data storage practices like where would the financial data of the users go? The government had stipulated that the company must comply with Indian norms, including:

• Complying with the Reserve Bank of India’s data localisation rules.

• Setting up an office in India

• Appoint a grievance officer and formulate a team in India.

The company in its FAQ said, “We’re building a new payment feature for India that enables people to easily send money to each other via WhatsApp. We are beta testing this feature so it’s only available to a limited number of people in India. Please be aware that the payments feature will change over time as we add more capabilities.”

After thorough discussions with the government, WhatsApp, in 2019, finally set up its data storage facilities in India. ICICI Bank was its partner in beta test in 2019.

WhatsApp Pay vs Google Pay vs Phone Pe

India already has a number of UPI payment services, out of which Google Pay and Walmart’s Phone Pe lead the market. With WhatsApp Pay coming in, the users will have more options. Notably, WhatsApp has a user base of over 400 million in India. With this number, it can easily take on its rivals Google Pay and Phone Pe. The main reason for this is its ease of use. If a person wants to send money to someone, he/she will just have to go to the receiver’s chatbox and tap on the payments option, enter the amount and authenticate it using UPI PIN. It is as easy as sending an image or a file. Since the feature is inbuilt within the app, people would not even have to keep an additional payments app in their phones. Moreover, nobody wants redundant apps on their phones.

Amid all of this, what gives Google Pay and Phone Pe an edge is their ability to send money to not only peers but also do recharges, bill payments etc. Also, Google and PhonePe have cashback offers which keep users hooked.

Comment from Mark Zuckerberg

“With UPI, India has created something truly special and is opening up a world of opportunities for micro and small businesses that are the backbone of the Indian economy. India is the first country to do anything like this. I’m glad we were able to support this effort and work together to help achieve a more digital India. I want to thank all our partners who’ve made this possible. When people can access financial tools, they’re more empowered to support themselves and others or start a business. Long term, we need more innovation that gives people control over their money, and making payments easier is a small step that can really help,”