It appears that WhatsApp, the world’s most popular messaging app – with over 1.2 billion users – is branching out into digital payment service, and India is being targeted as the first country to use this service. For a company that cost Facebook $ 22 billion to acquire, with as yet no sure way to bring in cash, this development is certainly welcome news. (To bring cash, WhatsApp once charged an annual one dollar subscription fee, but in 2016 the idea was dropped in favor of growth.) The hope is that the digital payment service will open the door for WhatsApp to bring business into its network. In India, the platform will be geared toward small businesses employing less than 10 people, who may be able to use the app to manage customer contact lists or multi-agent support.
Why is India the first point of call? There are many reasons. First of all, India is the second most populated country in the world, with 1.2 billion people. (China has the largest population at 1.35 billion, but it does not have a free-market economy. India has some level of protectionism as well, but in all, it appears to be more receptive to companies from the West.)
There are other reasons: India has over 200 million mobile phone users of WhatsApp, which is more than what the company has in any other market; so WhatsApp could at least attempt to capitalize on this situation. Furthermore, at the present moment, India is reportedly experiencing a boom in mobile payment. This follows the government’s announcement last year of plans to remove large-denomination bank notes, as a way to help crack down on tax evasion and counterfeits. The subsequent shortage in notes is driving the increased interest in mobile payment apps. Moreover, there are reports that people are already using WhatsApp to sell goods – reminiscent of the way Craigslist is used in the US.
Payment services are nothing new in India, moreover; which is a situation that’s both good and potentially bad for WhatsApp. Good, because the technology is already out there and doesn’t need to be introduced; bad because some other competing entities have done the introducing – and you know what they say about the “first in the mind?” The Reserve Bank of India reported that in January of 2016, India recorded more than 262 million transactions worth over $1.3 billion in digital payment services, compared to 100 million transactions in October of 2015.
Obviously, mobile financial transaction solutions have a special meaning for unbanked or under-banked communities in rural areas of developing countries such as India; providing impetus for the technology. As a result, such projects have attracted public and private funding from organizations such as the Bill and Melinda Gates Foundation and USAID.
Who is WhatsApp going to lock horns with in India digital payment service business, if the company should go ahead with its plans? The government of India has launched Unified Payments Interface (UPI), which allows banks and mobile apps to easily exchange currency. A potential competitor for WhatsApp is Truecaller, an app out of Sweden that was developed to remove spam calls coming into your phone. Truecaller announced its intention, less than two weeks ago, to roll out a payments service in India, and plugging into the UPI platform by partnering with a local Indian bank (ICICI Bank).
M-Pesa might as well be the one for WhatsApp to beat in India. It is a mobile phone-based money transfer, financing and microfinancing service out of Kenya that was launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania. M-Pesa is now being used throughout the developing world – Afghanistan, Kenya, India, South Africa, and Tanzania. In Afghanistan, Vodafone partnered with Roshan, Afghanistan’s primary mobile operator, to provide the local brand of M-Pesa in 2008. M-Pesa was launched in South Africa in 2010, although tough regulations in that country have reportedly stifled the potential of M-Pesa to dominate the market there.
M-Pesa also found its way into the Indian market in 2008, where it is locally referred to as M-Paisa, (the paisa is a subunit of the Indian rupee). The success of Kenya’s M-Pesa has reportedly generated a competitive environment, to the tune of almost 200 similar products. Vodafone M-Pesa was reportedly launched in India in 2013 and has brought financial and digital inclusion to more than 8.4 million Indians. The service now boasts of around 130,000 outlets across India, both in major towns and increasingly in rural areas. As a retailer or merchant in India, you simply need to download the Vodafone M-Pesa app, register for Vodafone M-Pesa Pay as a merchant, and your customers can use their (M-Pesa) wallet, bank account or debit/credit cards, in a completely seamless manner. Thus, WhatsApp will not be “discovering” India.