People are seen as silhouettes as they check mobile devices whilst standing against an illuminated wall bearing WhatsApp Inc’s logo. (Photographer: Chris Ratcliffe/Bloomberg)

Paytm Calls WhatsApp’s Closed Payments Service Unfair As Cashless War Intensifies

India’s largest online payments platform Paytm accused WhatsApp of trying to enter the nation’s cashless transactions market through unfair means by restricting the service to its own 200 million users.

Vijay Shekhar Sharma, founder of Paytm, said WhatsApp violated guidelines laid down by the National Payments Corporation of India by offering a walled-garden service. It was killing the Unified Payments Interface that allowed cash transfers among banks, he said. In a tweet, Sharma compared the move to Facebook’s Free Basics idea that fell afoul of the net neutrality principle.

WhatsApp is piloting peer-to-peer cash transfers in its biggest market with over 200 million active users a month. It joins a crowded space that includes Google Tez and the government’s BHIM app, besides banks and online wallet companies. Cashless transactions have grown after Prime Minister Narendra Modi’s cash purge in November 2016, especially through UPI that allows inter-bank payments. Paytm, which was the biggest beneficiary of demonetisation, has about 330 million users.

WhatsApp and NPCI didn’t immediately respond to emails seeking comment.

One of the issues Sharma referred to is the restriction of sending money to people who don’t use WhatsApp.

“In iOS version of WhatsApp, the interoperability feature is eliminated completely,” Deepak Abbot, senior vice president at Paytm told BloombergQuint over phone. “This is not fight between Paytm and WhatsApp; the case is that there are certain guidelines audited by the NPCI which are not followed and left out in the case of WhatsApp. It gives undue advantage and affects the core spirit of interoperability.”

Also, ‘scan and pay using QR’ or ‘request payments’ features are missing on WhatsApp, Abbott said. “Basic guidelines like a password is required as per NPCI to access the app so that users can logout, but in WhatsApp there is no concept of a password.”

Abbot said the guidelines were to maintain a uniform experience across all apps. “But a big player like WhatsApp got it arm twisted and got a favourable policy change is surprising.”

Paytm is considering taking its concerns to the NPCI.

Not everyone agrees. Bipin Preet Singh, CEO of Paytm’s rival MobiKwik, said WhatsApp is not flouting any rules and is doing what it should do to provide the best customer experience. “WhatsApp has more daily users than anyone else and will lead to greater adoption of UPI. It’s a classic case of peer-to-peer payment transaction. People who are complaining are simply afraid to lose their business,” Singh said over phone from Delhi.

Amrish Rau, CEO of payment gateway PayU; and Kunal Shah, founder and former CEO of FreeCharge, took to twitter to took a dig at Sharma.

Nikhil Kumar of iSPIRT foundation told BloombergQuint in an interview that WhatsApp’s new beta UPI feature is as safe as any UPI based payments service. He explains that UPI relies on two factor authentication and so whilst using WhatsApp for payments you are required to use the same SIM embedded in the phone along with a UPI pin which ensures that WhatsApp complies with the two factor guideline prescribed by the RBI and enforced by the NPCI.

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