WhatsApp Pay, received a green signal from NCPI in 2020, as a subsidiary of Meta, after two years of trial run. It is a feature within the chat to send or receive money through your contacts or by scanning QR codes. To avail the WhatsApp payment services users first need to link their bank account with UPI. It is powered by BHIM UPI which was developed by the National Payments Corporation of India (NPCI).
Despite various advantages of WhatsApp Pay, it didn’t rise to its potential. In April 2023, the market share of WhatsApp pay was just 0.09%. Even though WhatsApp as Messenger has about more than 2 billion active users already, it couldn’t make a place in the Indian market for itself when it comes to payments. The reasons for this are as follows-
Reasons for slow growth
- There are several restrictions imposed by NPCI from transaction limits to eligibility limits. When it was first launched, only 40 million users were allowed on it but since then it has increased to 100 million.
- WhatsApp Pay began in 2018 but by the time it got permission to roll out which took two years, the Indian market was comfortable with other platforms like Paytm, Google Pay, PhonePe etc. Capturing a highly competitive market with apprehensive customers when it comes to money is extremely hard.
- The company had neither a strategic entry method nor did it market WhatsApp pay well. It required advertisements that were aggressive and effective.
- Meta has been in hot water for privacy concerns so users are skeptical. A fear of their data being sold to third parties and other security issues concern the customers especially since it relates to financial information.
Ashneer Grover called WhatsApp Pay the biggest failure in India as a tech product. When sending money is as easy as sending a picture on WhatsApp then it should have been more widespread in the market.
Benefits of WhatsApp Pay
- No additional charges or commissions for transactions.
- It follows strict security and data privacy standards since it is end-to-end encrypted so it is secure.
- The procedure for setting up is simple and uncomplicated.
- Since users do not require any other app and can directly use it on WhatsApp, therefore, it is convenient.
- WhatsApp is already used by millions of users so there is a sense of familiarity.
- The transactions and history are all available in one place.
- It is partnered with trusted banks in India such as HDFC, SBI, ICICI etc. Users can directly pay from their account, which eliminates the need for a separate digital wallet.
What’s next for Whatsapp Pay?
To make space for itself in a fast-growing and competitive digital economy, it should focus on the following-
- Creating awareness about WhatsApp pay and focus on educating consumers.
- An aggressive marketing campaign with advertisements that focus on key areas (such as splitting bills made easy or paying quickly) and celebrity endorsements.
- Improving its user interface which is easily visible and accessible.
- Offering incentives to customers that will motivate them to switch their payment platforms.
Is it worth it?
Although WhatsApp is yet to discover its true potential, the question is – Do they need to extend it? Given that Meta is the parent company of WhatsApp, the true nature of Meta is to be a tech company. Their major focus has always been data-driven advertisements to its users. WhatsApp is another extension of it.
Secondly to be a FinTech company, digital payments is not sufficient in India. Revenues from consumer and vendor payment vertical after UPI has come to zero. Most of the FinTech Companies in India, that are successful, have to be creative and have an extension of their brands. Competition like Paytm, PhonePe, Freecharge, Cred, Navi, Groww, etc. have multiple brands under a single umbrella. All these brands though VC money have invested billions of dollars to reach this height. Is WhatsApp to ready heavily in India?
Thirdly, it is difficult to change the entire business model of WhatsApp. They need ponder and make significant changes. Line in Japan has been a success story. It is not only are a social media giant but a FinTech leader. For WhatsApp to succeed, they probably need to follow the model of Line in Japan.