Slow Start For WhatsApp Pay After Struggle To Gain Entry
A spectator holds a branded t-shirt during a roadshow for Facebook Inc.'s WhatsApp messaging service and Reliance Jio Infocomm Ltd.'s wireless network in Pune, India.

Slow Start For WhatsApp Pay After Struggle To Gain Entry

Three months after a full launch of WhatsApp Inc.’s payments feature in India— its largest market across the world with nearly one-fourth of the country’s population as its users, the service is yet to gain much traction.

WhatsApp Pay saw 0.56 million transactions worth about Rs 36 crore in January, rising marginally from 0.81 million transactions worth Rs 30 crore in December last year. In November, the month WhatsApp Pay got permission for full launch, their payment service had processed transactions worth Rs 13.87 crore.

Value of UPI transactions hit Rs 4.3 lakh crore in January across 2.3 billion transactions.

At current levels, WhatsApp Pay’s business is a far cry from the 20 million user base and 30% market share UPI transaction volume that NPCI had permitted the service to expand to in its first phase of launch.

WhatsApp Pay, which struggled with getting regulatory approvals, is a late entrant in an already crowded market of payment services offered via the UPI network. Google Pay, PhonePe and PayTM are some of the largest processors of UPI payments, apart from applications of individual banks.

WhatsApp did not respond to an email sent on Monday.

“Unlike other companies in the Indian payments ecosystem, WhatsApp Pay has not engaged in any kind of advertising or built incentives around its payment service. They are purely relying on its organic growth. Also, the payment onboarding is not very intuitive resulting in the slow take-off,” said Deepak Abbot, former executive at Paytm and co-founder of the fintech startup indiagold.

The existing large companies in the space, including Google Pay (launched in 2017), Walmart-owned PhonePe (launched in 2016) and Paytm Payments Bank (launched in 2017), have been resorting to incentives such as cashback and rewards to lure new customers. But WhatsApp Pay does not offer any such incentives.

Other factors may have also played a role in the relatively slow offtake of WhatsApp’s payment service. In early 2021, the company had rolled out new privacy terms that let it share user data with the larger Facebook network, including Instagram, but the company later pushed back the deadline amid a global backlash.

Even as WhatsApp has laid low on its marketing, according to Vivek Belgavi, partner and fintech leader at PwC India, it could also be because large technology giants such as Amazon and Facebook follow a different strategy when it comes to payments. Unlike other pure-play payment firms these companies look to create a niche that aligns with their larger business model, Belgavi said.

WhatsApp’s payment feature is expected to align with its plan to collaborate with JioMart, an e-commerce venture of Mukesh Ambani’s Reliance Retail. In April, Facebook bought a 10% stake in Jio Platforms Ltd. to connect to over 30 billion neighbourhood stores in the country through a combination of physical and digital retail.

“While some of the native players in the segment focus on leveraging their payments offering to build micro-ecosystems, for the big technology firms the strategy around payments needs to be aligned with their larger business vision,” he said.

In a Dec. 16 press release, Abhijit Bose, head of India at WhatsApp, laid out the “four pillars” that form WhatsApp’s vision for India. The company, he said, would focus on micro and small business ecosystem, easy access to business services, growing digital payments to drive financial inclusion, and offering insurance and pension products.

While WhatsApp Pay’s success may not seem obvious yet, it remains a strong contender within the Indian payments landscape, said Abbot. “Even as the payments landscape is crowded in India, WhatsApp’s large user base gives it a strong edge over other payment firms. In my view, if the company focused on marketing the payment product and improved its visibility within the app, the numbers are bound to grow and this could shake up the entire market.”

The opportunity is huge as according to a report by Credit Suisse Group AG India’s digital payments market is expected to grow to $1 trillion by 2023 led by growth in mobile payments, which it said could grow from $10 billion in fiscal 2018 to $190 billion by 2023.

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