By Durba Ghosh
Over 200 million WhatsApp users in India are eagerly awaiting UPI-integration on the popular messaging app, even as sector leaders such as PhonePe and Mobikwik have come out in support of the Facebook-backed WhatsApp’s payment feature and its role in widening the addressable market.
The digital payments ecosystem went in a tizzy after Paytm founder Vijay Shekhar Sharma accused WhatsApp of flouting rules of level playing field and NPCI abetting it in doing so, after WhatsApp announced its plans to enter payments. The bone of contention against WhatsApp has been around lack of interoperability, selective features, and data security.
Sameer Nigam, the co-founder of PhonePe, feels that fears of data privacy regarding WhatsApp’s payments feature is uncalled for. “The company is widely used with lots of data already on its system. They have their processes, and with NPCI at the helm, the experience will be smooth.”
Allaying fears of data theft, especially after the row around Facebook and Cambridge Analytica, WhatsApp has updated its privacy policies with regards to safety of user data and is also said to be in talks to offer interoperable payment transactions from other BHIM-UPI applications.
A user on WhatsApp can only send money to others on WhatsApp who have activated the UPI payments feature. The company has also simplified the virtual payment address by using the sender’s phone number, instead of arbitrary numerical addressed used by other payment services. WhatsApp users, much like Ola and Uber users don’t have to log-in separately each time either. WhatsApp has also left out the QR scan feature for payments and doesn’t allow users to request money as other UPI-powered payment apps do.
“Criticism against WhatsApp is on unreasonable grounds. What is really there to oppose! WhatsApp’s UPI integration will in fact do well in expanding the entire digital payments ecosystem. The consumer is benefiting, there is enough competition already, so then what is the contention with WhatsApp specifically!” Bipin Preet Singh, co-founder and CEO of MobiKwik says.
WhatsApp has also come out in the open to lay out its data collection policy. According to them the app collects basic data such as username, payment address, receiver and senders’ account status, balance sufficiency, and others, during the transaction. While some of the data is retained in encrypted form for better user experience, details of card used and UPI pin are not. The UPI pin, by rule, is already encrypted by NPCI software.
While WhatsApp is yet to confirm the official date of launch of its UPI-based payments service, sources in the industry have confirmed that the company is set to make the announcement by next week.
In a statement to ET, the California-based company confirmed that it uses Facebook’s infrastructure for offering payments in India, but ensures that the data stored is encrypted. WhatsApp has also set up a 24-hour customer support. Flipkart’s payments platform PhonePe has over 1,000 customer service agents across the country.
However, Nigam of PhonePe pointed out that WhatsApp is essentially a chat interface. Loading it with merchant transaction may be operationally difficult for the company and may impact user experience.
In contrast WeChat, the popular Chinese chat interface with over 800 million transactions a day, routes most transactions through the account page.
According to an analyst with Counterpoint Research, WhatsApp could get a sizeable share of peer-to-peer payments instantly on launch, in spite of operational issues. Paytm is currently the leader in Peer-to-peer payments space.
“Everyone with a smartphone has access to WhatsApp. It has emerged as the favoured Instant Messenger for 200 million Indians. With its new UPI-based payment offering, it will surely emerge as a disruptor in the payments space. It has a simple UI which is convenient for Indian audience. WhatsApp's massive user base could give the biggest boost to the adoption of UPI,” Jitendra Gupta, Managing Director of PayU India, said.
“India is an open capitalist country. I cannot just cry foul over global companies grabbing market. One has to win through merit,” Singh of Mobikwik added.
Currently, WhatsApp is testing the feature with over 1 million users in India, which is the largest base for the Facebook-owned company that has over 1.5 billion users globally. WhatsApp was permitted by NPCI to run the beta testing of their payments product till they reach 1 million customers. WhatsApp payment service, which rivals the likes of Paytm, has been in beta testing in India over the last few months.
NPCI or the National Payments Corporation of India is the nodal body for all UPI payments, which is a platform to send money to peers’ and merchants’ accounts directly from the sender’s bank account. The feature is deemed much more useful than mobile wallets, where one has to repeatedly top up the wallet using debit or credit card.
WhatsApp is working with ICICI Bank for the pilot. It is currently in the process of partnering with Axis Bank, HDFC Bank, and State Bank of India for its payments feature.