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WhatsApp was the best platform to use for an entry into India’s mobile money market, according to Neil Shah, an analyst at Counterpoint Research. India has more WhatsApp users than any other country — at 160m in November — slightly ahead of Facebook’s own tally in the country.
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Indians have also been unusually active in using WhatsApp to conduct business, he added. “I’ve seen people selling baby clothes, medicines, art and craft supplies — it’s become a Craigslist type of offering,” he said, referring to the US classified advertisement website.
According to a person with knowledge of its discussions in India, WhatsApp is expected to take part in a flagship project of the government: the Unified Payments Service, launched last year, which enables money to be transferred between different mobile money services as well as bank accounts. The new job advertisement requires applicants to be able to “understand and explain” the service.
Sharad Sharma, co-founder of iSPIRT, a think-tank that helped to develop UPI, said the platform would enable WhatsApp to offer a simple interface rather than developing a full-fledged payments system of its own. “They are not themselves in the payments business,” he said. “It’s an additional convenience that they are offering to people.
Mr Shah added that WhatsApp’s financial ambitions pose a threat to PayTM, a payments-focused Indian start-up in which the Chinese technology giant Alibaba has invested more than $680m.
The Big ReadWhatsApp: Let’s chatThe app acts as an alternative internet hub in many emerging markets — but can it make a profit? PayTM said in February that it had amassed 200m users, making it the largest of the prepaid “digital wallet” companies that have enjoyed a surge in usage amid the cash shortages that followed the November demonetisation.
There were 262m transactions worth Rs83.5bn ($1.3bn) using digital wallets in January, according to the Reserve Bank of India, up from 100m in October and 49m in January 2016.
Expectations were high for mobile money in India even before demonetisation: a report last year by Google and Boston Consulting Group forecast that digital payments would grow tenfold to $500bn by 2020, with cash transactions falling from 78 per cent of the total in 2015 to less than 50 per cent in 2023.
“India has been on a huge digital payments boom — WhatsApp couldn’t have asked for a better time to roll this out,” said Neha Dharia, an analyst at Ovum, adding that the company’s large user base gave it an opportunity to “eat away” at PayTM’s dominant position in the market.
Facebook fell foul of Indian authorities by trying to roll out a free internet offering limited to its own and selected other services — a project that it suspended last year when regulators ruled against differential pricing of online content.
WhatsApp’s plans for payments in India were first reported by The Ken, an Indian business news website.
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