The National Payments Corporation of India (NPCI) had allowed Facebook-owned messaging platform WhatsApp to start its payments service in a “graded” manner. This ends a two-year wait for WhatsApp Pay, which has been operating pilot operations for users in India. Whatsapp can expand its UPI user base in a graded manner, starting with a maximum registered user base of 20 million in UPI. Whatsapp has 400 million users in India as per a report in May. NPCI’s move came just days after its popular UPI network for the first time crossed the two billion transaction mark to firmly establish itself as the primary retail payment channel in the country. In October, UPI processed 2.07 billion transactions worth Rs 3.86 lakh crore.
This permission was given to Whatsapp after NPCI decided to set a 30% cap on transaction volume for third-party apps using the UPI network from January 1, 2021. It is calculated based on the total volume of transactions processed in UPI during the preceding three months. WhatsApp had planned to debut its payment services in India. However, the Facebook-owned company could not do so in time as it could not meet the data localization needs set up by the Indian governent. According to RBI rules, payments data, information on payments or settlement transactions, customer data, among other information, has to be stored in India for the platform to get approval.
Currently, the application offers payment services on a trial basis to around 1 million people in India. WhatsApp Pay also faced a challenge in the Supreme Court earlier this year, when a plea was filed regarding a company’s pilot payment program. Whatsapp will be using ICICI bank as its partner bank in providing UPI transactions. At the same time, Google Pay and Phonepe have two partner banks in proving UPI transactions. As per the latest undisclosed statistics on UPI, Walmart-owned PhonePe is the most used UPI app in the country, having processed nearly 835 million transactions in October. Payment is available now available in 10 Indian regional language versions of WhatsApp. WhatsApp has added commerce features in recent years, including product catalogs and shops, so those small businesses can promote and sell goods directly through the app. The increase in cashless payments due to the virus outbreak and the popularity of Whatsapp in India pose a threat to the established players in this sector. The popularity of Whatsapp with an existing user base of 400 million and the security of the app would attract people to make UPI payments through Whatsapp Pay.