WhatsApp Closes In On Full Fledged UPI Payments Launch
The WhatsApp Inc. mobile-messaging application WhatsApp is displayed on a Samsung Electronics Co. Galaxy S4 smartphone. (Photographer: Chris Ratcliffe/Bloomberg)

WhatsApp Closes In On Full Fledged UPI Payments Launch

Facebook Inc.-owned messaging service WhatsApp is moving closer to launching full-fledged payments service on the unified payments interface, as it has met a number of the key pre-conditions, two people in the know have confirmed.

WhatsApp Pay, which was to launch two years ago with State Bank of India, HDFC Bank Ltd. and ICICI Bank Ltd., has a pilot project running which offers payment services to about a million people. Expanded payment services from WhatsApp, which has nearly 400 million users, would shake up a market dominated by three private service providers — Google Pay, PayTM and PhonePe. Amazon Pay, too, is gaining traction.

A full launch of WhatsApp Pay had been stalled after the Reserve Bank of India released data localisation norms in April 2018, asking payments service providers to store all payments information on Indian servers only. The regulator had set a deadline of Oct. 15, 2018 to comply with these norms. The data localisation rules proved to be a complex task for international service providers, who store data in centres around the world.

WhatsApp has now met most of the data localisation conditions and will soon be in a position to expand payment services, said one of the two people cited above. A final decision on the extent of rollout permitted may be taken in the next week or so, this person said.

Business Standard first reported on Friday that NPCI had cleared WhatsApp Pay’s launch and that it would look at a phased roll out.

An email sent to WhatsApp on Friday morning remained unanswered. A NPCI spokesperson declined to comment.

The UPI Battleground

UPI was launched by the National Payments Council of India in August 2016. The payments interface saw significant traction after the Indian government decided to pull Rs 500 and Rs 1,000 currency notes out of circulation after demonetisation.

At the end of January, UPI recorded 130.5 crore transactions worth Rs 2.16 lakh crore across India.

Services that can be offered via UPI have also continuously been expanded. Customers can now transfer up to Rs 2 lakh via UPI-based payment applications. Features including recurring payments and subscriptions for initial public offerings have been added to the UPI platform.

While recent data on the share of UPI payments is not available, Google Pay and PhonePe, along with Paytm, have been leaders. WhatsApp could quickly disrupt the market given the penetration of its messaging services in India.

“We are doing about a billion transactions a month on UPI, so the goal would be to double that. There’s also a lot of work to be done on the offline touch points and getting more businesses to accept UPI transactions,” said Vivek Belgavi, partner at PwC India. “There are still miles to go on this UPI journey. It would be interesting to see how WhatsApp is able to merge the peer-to-peer transactions and business transactions together.”

Also read: Can India’s UPI Become A Global Model? Google Thinks So.

India is the biggest market for WhatsApp where it serves 400 million customers.

The company has faced not just regulatory issues but legal challenges in its attempt to launch full-fledged payments services. In 2018, the Centre for Accountability and Systemic Change filed a petition against the messaging application for not complying with many Indian norms, including the RBI’s data storage rules. The banking regulator in November 2019 had informed the Supreme Court that it has directed NPCI to ensure that WhatsApp is compliant with the data storage rules, before a full rollout of payments services.

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