Facebook-owned messaging platform WhatsApp may soon ask to verify your identity to access the payment feature. WhatsApp pay was launched in 2018 in India as a part of trail run and after getting approval from National Payments Corporation of India (NPCI), the service was officially rolled out to the public last year. Now as per a report by XDA-Developers, the strings in the latest WhatsApp beta indicate that the platform will need to share their verification documents to access the payments feature.
As of now, to use the WhatsApp Pay service in India, you just have to verify the phone number linked to your bank account for UPI transactions. Currently, the platform doesn’t ask for any verification documents from users for any service. According to a report, WhatsApp v2.21.22.6 beta gets new strings that suggest the above mentioned change.
The company has not yet officially made an announcement about this change. Several other popular UPI-based apps such as Google Pay, Phone Pe and others don’t ask users for verification documents. The report suggests that WhatsApp’s move may be limited to business account users only.
The company is constantly working to improvise the ecommerce experience on the platform. Recently, it started to roll out a new feature called ‘Collections’. The feature allows you to shop items from the messaging platform using categories. In simple words, the feature allows business account holders to organise products in their catalogs according to the category so users can easily find the desired item without scrolling through the long list of items.
If you have a WhatsApp business account, you can create a collection by following these steps. Tap on the three dots at the top right corner of the app > tap on Business Tools > select Catalog > tap on Add New Collection. Apart from this, the company released the ‘Carts’ feature that makes it easier for customers to buy multiple items.
Designed in partnership with the National Payments Corporation of India (NPCI), on the Unified Payment Interface (UPI), the payments feature on WhatsApp enables transactions with over 227 banks.
In a bid to strengthen its payment services offering in India, instant messaging platform WhatsApp has introduced ‘Payments Backgrounds feature on the platform.
“Built for India, this new feature is relevant, exciting, and memorable as it helps people easily convey a feeling along with sending money,” said a company statement on Tuesday.
Manesh Mahatme, Director of WhatsApp Payments said: “WhatsApp is a safe space where people share their thoughts and feelings with their friends and family. With Payments Backgrounds, our effort is to bring excitement to everyday payments through WhatsApp and enable our users to express themselves if they wish, through a range of emotive themes denoting celebrations, affection, warmth or fun.”
“We believe that sending and receiving money is so much more than just a transaction. Often, it’s the stories behind the exchanges that are priceless. We look forward to creating more features and functionalities and continue making payments on WhatsApp an interesting and interactive experience,” he added.
Conversations around payments
Conversations involving payments are often imagined to be simply transactional. WhatsApp has created this thematic range of artful expressions to complement sending payments on birthdays, holidays, or for gifts and travel, the company said.
As per WhatsApp, the core idea of this feature update is to create a more personalised experience for the sender as well as the receiver by adding an element of expression when friends and family exchange money.
“Whether it is friends splitting the bill after a meal, sending money to near and dear ones as a token of your love or gifting your sister on the occasion of Rakshabandhan, payment backgrounds make sending money personal and brings alive the story behind every payment,” the statement said.
WhatsApp has been trying hard to make a mark in the already crowded online payments segment in India with strong incumbents including Paytm, Google Pay, PhonePe, Amazon Pay already having consolidated their position.
The gap between the top three UPI apps and WhatsApp Pay is quite epic.
It took a good over a two-and-a-half-year period for Facebook-owned WhatsApp to roll out its much talked about payments service in November 2020 from around February 2018 when the messaging giant had started testing the feature. In October 2020, a month before the rollout, WhatsApp Payments or WhatsApp Pay had processed 70,000 UPI transactions amount to Rs 9.32 crore. In its first month (November) of approval from the National Payments Corporation of India, which operates the UPI payments infrastructure, the figures jumped to an impressive 3.1 lakh transactions worth Rs 13.87 crore. However, the growth, in transactions primarily, since its launch till February 2021 arguably hasn’t picked the kind of pace one would have expected from WhatsApp that counts over 500 million users in its biggest market India. As per NPCI data, WhatsApp managed to scale to 5.5 lakh UPI transactions worth Rs 32.41 crore in February.
“The reason is very clear. It is the lack of use cases. Right now, WhatsApp is offering peer-to-peer (P2P) payments. There is no geography where just on the back of P2P payments, digital payments have proliferated. They don’t have those P2M transactions or use cases defined really well,” Arnav Gupta, an analyst at Forrester Research told Financial Express Online.
WhatsApp didn’t reply to an email seeking comments for this story.
The Roadblock
While the company has been studying the digital payments market for at least three years, the business side of the platform has been a roadblock for the company as WhatsApp hasn’t been able to further evolve it and connect it back to payments proposition. For example, Gupta said that WhatsApp is only a unilateral channel of communication for enterprises to speak to their customers. For instance, a travel portal can send a customer’s travel tickets and invoice on WhatsApp but he/she cannot talk back to the company while there are very few and limited use cases where there are chatbots set-up. According to Gupta, that is the struggle WhatsApp is going through.
WhatsApp’s viral growth and the kicking off of its networking-effects in the early days was certainly the stuff of legend. However, that has not translated yet in its payments business that has been approached in fits and starts. “WhatsApp’s desire to keep its interface consistent across geographies meant it was unable to create a dedicated payments interface within the app for India despite the exploding UPI market. This means it lags in a market it could have clearly dominated. Even when we look at the data in the past three months, its transactions have fallen in January 2021 from a December 2020 high,” Utkarsh Sinha, Managing Director, Bexley Advisors, a boutique investment bank firm, told Financial Express Online.
Importantly, WhatsApp Pay rollout had coincided with the NPCI announcement in November that third-party applications offering UPI payments service can process a maximum of 30 per cent of the transaction volumes starting January 1, 2021. The decision, according to an NPCI statement, was taken to “address the risks and protect the UPI ecosystem as it further scales up.” Moreover, NPCI had allowed WhatsApp to launch payments service in a graded manner to a maximum of 20 million registered users in UPI.
“Limiting the number of digital payments that could be made via payment apps adversely affected all other wallets, including WhatsApp,” Prabir Chetia, Head – Business Research & Advisory, Aranca told Financial Express Online. Moreover, the entire payment section had a step-by-step launch with no marketing push. “There was no big bang marketing campaign to announce its entry into the payment space. Hence, the awareness regarding this new offering of WhatsApp is very low. Consumers who are tech-savvy and active users of the app may know about it and even use it, but many others still view it as a communication tool,” added Chetia.
Missing the Bus
The thought perhaps at WhatsApp back in 2017 was about leveraging the customer loyalty for its messaging environment to plug-in the payments service. This would have meant for customers to remain within WhatsApp instead of exiting it and using Paytm, PhonePe, Google Pay, others for transacting online. However, a nearly three-year long period from testing the service to its eventual launch has perhaps impacted its growth. “Had they been able to launch then (in 2018), they would have evolved like others. They have missed the bus by over two years. Having said that, their partnership with Jio could be a potentially viable business model and can create some buzz. But JioMart is not available on WhatsApp in all the cities currently,” said Gupta.
In April 2020, Facebook had picked up a 9.99 per cent stake in Jio Platforms at $5.7 billion. The deal had supporting India’s vast small business base digitally as its key focus. Moreover, Mark Zuckerberg at a company event in December 2020 with Mukesh Ambani had revealed that WhatsApp has 15 million business app users from India. “Jio brings digital connectivity, WhatsApp now with WhatsApp Pay brings digital interactivity, and the ability to move to close transactions and create value, and Jio Mart brings the unmatched online and offline retail opportunity, that gives our small shops which exist in villages and small towns in India, a chance to digitise and be at par with anybody else in the world,” Ambani on his part had said. Jio and WhatsApp have more than 400 million customer base in India.
“WhatsApp has been ironing out its strategy for the space since 2017. But that has led it to concede valuable space to the current incumbents. If WhatsApp was aggressive in payments to start with, a lot of the current competition would have struggled to gain a foothold,” said Sinha.
The Epic Gap
Current UPI payments incumbent PhonePe had cornered an impressive 42.5 per cent share of the 2,292.90 million UPI transactions in February, as per NPCI data. Walmart’s payment arm in India – PhonePe had processed 975.53 million UPI transactions amounting to Rs 1.89 lakh crore. Likewise, Google Pay, which lost the top spot to PhonePe in December 2020, was the second-largest UPI app in February processing 827.86 million transactions (36 per cent of total UPI volume) worth Rs 1.74 lakh crore. On the other hand, Paytm was still the distant third player in February recording 340.71 million transactions involving Rs 38,493.52 crore. It had processed 332.69 million transactions worth Rs 37,845.76 crore in the preceding month.
The gap between the top three UPI apps and WhatsApp Pay is quite epic. “WhatsApp has a huge user base. However, these users are using it as a communication tool. Will they become loyal to its payment solution? I think it is unlikely,” said Chetia. Despite a large user base, those living in Tier-III cities and beyond are less likely to use WhatsApp for payments. That’s also because, unlike its large competitors, WhatsApp doesn’t offer cashback and other add-on services as incentives. “Even if they build out certain use cases, still daily active users on other platforms are far too much. So, I don’t think WhatsApp would be in a leadership position,” said Gupta. However, it might be too early to call any winners in the UPI space. WhatsApp still owns the Bharat behind India, and their entry is a significant tectonic shift that might unlock a lot of disruptive value in the long term. It is precisely because of their scale that this value potential exists.
Andhra Bank and Indian Bank recorded the second and third highest TD rate of 10.40 per cent and 9.83 per cent respectively in January.
Public sector lender Union Bank of India continued to witness the highest failure rate for UPI transactions among India’s top 30 UPI remitter banks due to technical reasons in January. From 10.75 per cent technical decline (TD) in December, the failure rate jumped to 12.89 per cent in January for Union Bank of India, data from the National Payments Corporation of India (NPCI) showed. 85.95 million UPI transactions were processed by Union Bank of India during the month out of which nearly 80 per cent were approved while 7.36 per cent were declined due to reasons including invalid pin entered by customer, incorrect beneficiary account, exceeding per transaction limit or permitted count of transactions per day or amount limit for the day, etc. Andhra Bank and Indian Bank recorded the second and third highest TD rate of 10.40 per cent and 9.83 per cent respectively in January.
Among the top 30 UPI beneficiary banks (bank of the account holder who is receiving money) as well, Indian Bank recorded the second-highest TD rate of 5.50 per cent while Syndicate Bank topped the tally with 8.65 per cent. Karnataka Bank posted the third-highest TD rate of 3.18 per cent among UPI beneficiary banks in January. State Bank of India, which posted the highest TD rate of 9.08 per cent in December, improved it to 1.52 per cent in January.
Paytm Payments Bank recorded the lowest TD rate of 0.05 per cent on 145.61 million transactions in January among remitter banks. In terms of transaction volume, the top remitter banks were SBI (664.75 million), HDFC Bank (206.65 million), Axis Bank (173.38 million), and ICICI Bank (152.06 million). Among beneficiary banks, CITI Bank saw zero transactions failing due to technical reasons on 5.94 million transactions. Paytm Payments Bank (368.90 million), SBI (354.61 million), Yes Bank (273.95 million), ICICI Bank (237.59 million), and Axis Bank (207.61 million) saw the highest volume among beneficiary banks.
Walmart-owned digital payments company PhonePe was the highest UPI app in January processing processed 968.72 million UPI transactions involving nearly Rs 1.92 lakh crore. PhonePe volume was more than 100 million transactions higher than Google’s 853.53 million transactions worth Rs 1.77 lakh crore. Paytm Payments Bank, however, remained the distant third player with a volume of 332.69 million worth Rs 37,845.76 crore.
PhonePe, Google Pay, and Paytm Payments Bank together had a lion’s share of 89 per cent in total UPI volume and 93 per cent share in value terms for December 2020.
WhatsApp Payments, which went live in December 2020 for up to 20 million users, has grown by over 2X in UPI transactions volume and value as well from November, according to the latest data released by the National Payments Corporation of India (NPCI). WhatsApp Payments UPI volume was up from 0.31 million transactions (3.1 lakh) worth Rs 13.87 crore in November 2020 to 0.81 million (8.1 lakh) involving Rs 29.72 crore in December. WhatsApp Payments is the latest entrant in the UPI apps segment that is currently led by PhonePe, Google Pay, and Paytm Payments Bank. PhonePe was on top of the table in December with 902.03 million transactions worth Rs 1.82 lakh crore processed up from 868.4 million transactions worth Rs 1.75 lakh crore processed in November.
Google Pay slipped to the second spot in December with 854.49 million transactions involving Rs 1.76 lakh crore down from 960 million transactions in November even as the value was up from Rs 1.61 lakh crore. Paytm Payments Bank remained at a distant third spot among UPI apps with 256.36 million transactions involving Rs 31,291.83 crore in December from 260.09 million transactions worth Rs 28,986.93 crore in November. Amazon’s payment vertical Amazon Pay managed to process 40.53 million transactions worth Rs 3,508.93 crore in December down from 37.15 million worth Rs 3,524.51 in November.
UPI transactions ended 2020 hitting the Rs 4-lakh-crore value mark in December involving 2.23 billion transactions, up from 2.21 billion transactions worth Rs 3.91 lakh crore in November. The annual growth in volume was 70 per cent from 1.30 billion transactions while the value was up 105 per cent from 2.02 lakh crore in December 2019. Also, the number of banks live on the UPI platform increased from 143 to 207 during the 12-month period.
PhonePe, Google Pay, and Paytm Payments Bank together had a lion’s share of 89 per cent (2 billion transactions) in terms of volume and 93 per cent share (Rs 3.89 lakh crore) in value. The UPI transaction volume and value have been able to grow faster during the Covid and lockdown phases as people increasingly transacted digitally. The volume jumped by 908.47 million transactions during the 10-month period from 1.32 billion transactions in February 2020, according to the analysis of NPCI data. However, in comparison, similar volume growth of 908.47 million transactions, before Covid, took 17 months (from September 2018) to reach the February 2020 level.
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