Facebook-owned WhatsApp has been teasing its payment system “WhatsApp Pay” for a while now and has finally rolled out in Brazil. It is the first nationwide rollout of the payment system.
In India, WhatsApp Pay was introduced in February 2018 on a beta version for testing. The company partnered with ICICI Bank for payments to a million users.
In February 2020, National Payments Corporation of India (NPCI) gave its nod for the rollout of this service in a phased manner. The first phase will be providing this service to 10 million users in India. NPCI has also made it compulsory for all digital payments platforms to have a multi-bank model rather than a single bank model.
As a lesson from PhonePe and Swiggy’s downtime during the YesBank moratorium, all digital payments have to adapt to a multi-bank model. WhatsApp Pay will be partnering with 3 banks- Axis Bank, HDFC Bank, and ICICI Bank at the beginning. Public sector Bank SBI will be joining the collaboration later as they are expecting a higher security architecture.
WhatsApp Pay: How will it be for the users?
One of the biggest benefits of WhatsApp Pay will be that it will be easy to use. Since the messaging platform already has millions of users, they are well acquainted with its feature. A sense of similarity will help users adapt better to a new feature.
This feature will be added to the file-sharing icon where users will see an option to make a payment. There will also be a shortcut menu so users can check their transaction details quicker. WhatsApp Pay will be part of the Unified Payments Interface (UPI) method that allows people to transfer money without having to go through the process of providing bank account numbers and IFSC codes.
Only those contacts that have a UPI ID will be able to receive or transfer money through WhatsApp payments. For those not on their contact list, WhatsApp Pay will verify QR codes.
The Jio factor
In April 2020, social media giant Facebook invested heavily in India’s Jio Platforms run by Reliance Industries. This development will help Reliance industries tremendously in writing off the debt and help Facebook’s WhatsApp to find a wider market.
Reliance’s e-commerce division JioMart will see most of its Payments through WhatsApp Pay. This will mean a big userbase for WhatsApp Pay. Together, Facebook-Jio will become a digital giant by thriving in industries such as e-commerce, content, and connectivity.
Boost for small businesses
As simple as it seems for users, it will be simpler for small businesses to accept payments through WhatsApp Pay. WhatsApp business already saw a good share of adoption in the Indian market and with the payment system rollout, it will be a further boost.
The pandemic has already forced small businesses to adapt to digital tools to keep their businesses running. Going through a long process of payments for small businesses is both difficult for users as well as sellers. Setup of payment in chat will help keep account of transactions and speed the delivery process.
Competition for other digital payments platforms
Platforms such as Google Pay, PhonePe, and PayTM need to gear up for tough competition with WhatsApp Pay since it is already having a huge userbase and Reliance backing. While WhatsApp Pay is bringing banks on board, GooglePay already has a partnership with Axis Bank, ICICI Bank, HDFC Bank, and SBI bank for its UPI transactions.
WhatsApp would have to work a little on establishing its presence as other UPI apps have already made their place in the market. Over 90% of the market share is dominated by these platforms with PhonePe leading and GooglePay following up second.