Entry of WhatsApp in Payment Business to Threaten PayTM and Google Pay


It comes as no surprise that messaging applications like WhatsApp have been elevated to a position of necessity in the lives of modern individuals. The cross-platform messaging freeware’s surge in global popularity has enabled it to become entirely synonymous with the activity of texting. In India itself, the number of active monthly users of the application has exceeded 200 million according to marketing research company, Forrester. Capitalizing on this large market, the Facebook-owned company has set foot into the competitive realm of digital payments by building the feature into the application – making it the first messaging platform in India to do so.

While the feature hasn’t been officially rolled out to the mass market yet, beta versions have been in operation for the past couple of months. WhatsApp users can send money to an individual directly via a WhatsApp chat, making it as simple as sending an image or video. The payment feature is accessible by integrating the application and mobile number with the Unique Payments Interface (UPI), which links an individual’s mobile number to his/her bank account(s), making real-time money transfer a hassle-free process.

How can payments be made on Whatsapp?

The first essential requirement of being able to send and receive payments is downloading the latest version of the application. Both the sender and receiver also need to activate UPI on their phones for a transaction to take place.

Once these formalities are completed, payments can be made in two ways. The sender can access the Payments tab in the Settings menu in the application, choose the receiver, and send the desired amount after verifying it with his/her UPI pin. Successful transfers are followed by a receipt of the transfer amount in the application itself. In the second alternative, the payment can be made directly through the chat itself. This, however, requires activating a Whatsapp Payments account.

The Essential Pros

  • Transferring money digitally can become easier. Once the initial requirements of integration and linking are met, one can easily send money without subtstantial effort and in lesser time.
  • The WhatsApp interface is fairly easily to navigate. Individuals who are not comfortable with using technology can also make use of this feature as additional formalities are minimal.
  • Any type of detail filling hassle is required only during the initial set-up. Users do not need to enter bank account numbers and bank IFSC codes every time they engage in a transaction.
  • Seamless integration of multiple utilities in one platform – WhatsApp found global recognition by providing a free and simple mode of communication. Now, it’s setting the bar higher by adding to that a convenient mode of funds transfer.

The Undesirable Cons

  • The payment feature utilizes only a single-factor authentication, that is, the UPI pin while confirming transactions. This augments security concerns as a misplaced pin could lead to misuse and unwanted transactions.
  • Transactions can only take place between WhatsApp users. A sender can only transact with an individual who is on his/her contact list. Moreover, only peer-to-peer transactions are supported.
  • The feature is still in the beta stage and has not been fully developed and tested. It will take a considerable number of updates in the future to fix bugs and optimize the medium.
  • Fake news and misleading forwards on WhatsApp are rampant in India, and have gradually grown into a major issue. Gullible individuals can be duped into transferring money under the pretext of donations or social causes.

Competition and Disruption

While WhatsApp’s entry into the payments sector is much-awaited by individual consumers, some entities are not the least happy about it. Digital wallets and mobile payments services like Paytm and Google Pay, among others, are increasingly threatened by this move. Given WhatsApp’s user base and brand loyalty, WhatsApp has the potential to grab a greater chunk of the market share and cannibalize revenue streams of its experienced competitors. However, the company is still yet to formally establish physical operations in India before it can pursue greater prospects. Nevertheless, if WhatsApp moves forward quickly and strategically, it can convert the immense potential into what might end up becoming a paradigm shift in the Indian digital payments sector.