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WhatsApp Pay Looks to Strengthen India Presence with Homegrown FinTech Solutions

WhatsApp Pay to Rely On Fintech Solutions Made By Indian Companies

WhatsApp is in the final process of launching its payment service Whatsapp Pay after two-year-long beta testing in the Indian economy. It is expected to arrive in the Indian market by the end of May 2020.

One of the substantial steps taken by India towards achieving the aim of a Digital-First Nation has been the institution of unified payments interface (UPI). The digital payments service still has a great margin to improve and advance. In the Recent time, Prime Minister Narendra Modi spoke about the development and room for improvement in India’s digital economy in a recent mention to leaders of the US-India Business Council.

India has approximately 500 million active internet users, with another 500 million that are soon expected to join the web. This being said, the efforts in increasing the size of Digital India demands to bridge the gap and expand access to the tools and platforms that power India’s digital economy. It is worth noting that the National Payments Corporation of India (NPCI) recently put a cap on UPI dealings for digital payments platforms like Google Pay, PhonePe, Paytm including others.

Will Cathcart, Head of WhatsApp recently said in a self-written article, “Four years ago, Prime Minister Modi set in motion a spearheading initiative to give Indian citizens access and the ability to make digital payments to one another and to the more than 60 million Indian small businesses.”

UPI

Further, he added about UPI amalgamation with WhatsApp, “We can aid in powering a new wave of financial technology(Fintech) innovation and financial inclusion.” The platform also has the capacity to back up a larger suite of fintech applications like micro-pensions, digital insurance products, and flexible loans, something that can be very well expected on WhatsApp in the approaching future. Such custom solutions by Indian technology companies based on the UPI platform have the propensity to deal with large social, business and financial problems in the country.

He also mentioned that the UPI has proven to be ‘wildly successful’ in just four years operating a 100 million user base ever since its launch.

What will Whatsapp pay offer?

Whatsapp is planning on working with organisations like banks and financial institutions in India to make it smooth for people to access services including insurance, microcredit and pension, its India Head, Abhijeet Bose had said in July.
The company will also provide pillars to numerous pilots to test potential solutions to solve problems related to the distribution of financial services, Bose said at the Global Fintech Fest. WhatsApp had started screening Whatsapp pay in India in 2018.

The UPI-based service, allows its users to make use of the messaging platform to send and receive money. It rivals with Softbank-backed Paytm, Flipkart’s PhonePe and Google Pay in India.

market share of various UPI based apps

WhatsApp has an upper hand over other applications in the digital payments sector because it is the app of choice for 96 per cent of smartphone users in the country as a communication application. The WhatsApp Pay will use UPI, allowing its users to go through with payments and facilitate transactions from their bank accounts. WhatsApp Pay online payments will also include customer support by a number of banks, such as the State Bank of India, ICICI Bank, HDFC Bank, and Axis Bank, IANS reported.

 

Impact of Whatsapp pay on Digital scene

The impact of WhatsApp Pay on the electronic ecosystem is expected to be notable and also on other applications using UPI as a payments platform. With WhatsApp possessing the highest approval, insight and ease of use among the population even in more rural settings of the country, where people don’t have the required knowledge and literacy to use the digital media.

This solves the problem for Whatsapp of adoption and penetration of the market as 96% of the people already have the application and its working knowledge. Even the general population who use a Western Union or a bank account to send money are known to WhatsApp.

 

The struggle faced by Whatsapp Pay

Facebook-owned WhatsApp continues struggling to establish its digital payments service in India. The messaging app had guaranteed the National Payments Corporation of India (NPCI) in May that its payments platform will be compliant with all local data protection and storage regulations.

At the beginning of the year, NPCI had allowed Whatsapp to launch its payments services in a phased manner for beta-testing, starting with only 10 Mn users. However, NPCI had retracted its approval soon after, continuing WhatsApp Payments struggle to establish itself in India.

Reportedly NPCI wanted to give permission to WhatsApp Payments only after the digital company was compliant with all Reserve Bank of India (RBI) regulations. In November 2019, RBI had well educated the Supreme Court about the order during a hearing on WhatsApp’s compliance to data localisation policy.

As of today, RBI has not completely rejected WhatsApp’s payment gateway, WhatsApp Pay. However, it elucidated that it has not yet granted permission to WhatsApp to go further for full-scale operations on UPI payment system in India. RBI filed an affidavit in Supreme court and mentioned that the payment application is still under hard scrutiny and will only be given permission when all the required compliances are cleared.

What the future holds for the tech giant?

As of this month, Facebook subsidiary Whatsapp came in a partnership with Reliance Jio with the aim of creating growth opportunities for millions of small scale merchants and Kirana shops. “More than 400 million WhatsApp users in India bring unique value to our partnership,” Ambani mentioned at the company’s first AGM.

Facebook CEO Mark Zuckerberg said that this partnership is a great opportunity to allow small businesses and entrepreneurs in the country to buy and sell things through WhatsApp.

“Our ultimate goal is to provide access to people managing the business on small scales which revolves around sanctioning payments. A large part of this partnership with Jio will be to give people the platform and get small businesses in India with WhatsApp, to conduct business there,”  Facebook CEO highlighted.

About the author

Oishika

Oishika is a management student with a curious enthusiasm for MBTI and classic literature. She's a capable leader, although she doesn't choose to lead unless she has to. She is an obsessive reader and an impulsive writer which can get intense on occasion. She is currently creating content at TIW.

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