WhatsApp Inches Closer To Full UPI Compliance, Enables Scan QR Code Feature

Over a month after Paytm accused Facebook-owned WhatsApp of trying to enter the country’s digital payments market through unfair means by flouting NPCI norms on UPI, it seems that the instant messaging company has inched closer to complying with all the guidelines.

As per reports, WhatsApp’s payments app now allows users to transact via QR code. The beta version V 2.18.93 of its Android app is equipped with the QR code feature, which will be rolled on Play Store within the next few days.

At present, the app comes with two payment options: pay through UPI and Scan QR code. To make payments through QR codes, WhatsApp’s Android beta users will have to scan the code under Settings > Payments > New Payments > Scan QR code, following which they will be asked to enter the payment amount along with the UPI ID.

Furthermore, users have the option to view their own QR code through “Show QR code” on the payments panel of the app.

WhatsApp started testing its UPI-based payments feature in India towards the beginning of February this year. The instant messaging company also recently added ‘Send to UPI ID’, in addition to other features like advanced GIF search and stickers search.

The latest QR code rollout line with the claims made by people close to NPCI that WhatsApp will be implementing all the required features when it goes live for its entire consumer base, which is expected to happen by the end of March.

A Rocky Start For WhatsApp’s Payments App

Since the launch of the pilot, WhatsApp’s entry into the country’s digital payments sector has been marred by conflicts and controversies.

It all started with Vijay Shekhar Sharma, CEO of Paytm, accusing Facebook-owned WhatsApp of trying to enter the nation’s digital payments market through unfair means by flouting NPCI rules on UPI and deliberately restricting the service to its own 200 Mn users.

In a tweet that invoked Facebook’s unsuccessful tryst of colonising the Internet with Free Basics (which too Vijay Shekhar Sharma had opposed tooth and nail), he accused Facebook of trying the same trick again by killing the open UPI system with closed implementation through the payment feature of WhatsApp.

Among the concerns raised by the Paytm founder was the fact that WhatsApp’s trial service does not require a login session and Aadhaar-based payments. Sharma believes that a lack of a login makes WhatsApp payments a security risk, akin to giving an “open ATM” to everyone.

In a conversation with Inc42, Deepak Abbot, Senior Vice President at Paytm, further explained Paytm’s concerns, stating, “All UPI Apps need to have an app password, to give an option to reset password or log out to the user. But there’s no concept of password or log out in WhatsApp. It will eventually allow anyone to send money with a single factor of authentication.”

Additionally, the spirit of interoperability has not been adhered to. As per Deepak, WhatsApp has also refuted the UPI mandate by not allowing customers to pay using bank account plus IFSC or Aadhaar number and not issuing UPI QRs. Other mandated features like ‘request payments’ are missing in WhatsApp, which means that a Paytm user cannot request money to a WhatsApp user.

This effectively implies that WhatsApp is trying to create a walled garden by restricting the service to its own users and thus monopolising on the back of its dominant position, claimed the Paytm team.

Deepak further adds that the BHIM-UPI branding isn’t used anywhere in WhatsApp while all bank apps have to necessarily comply with the mandate and make it visible.

The Facebook-owned service is using the phone number as the VPA instead of cumbersome addresses such as 123456789@icici as Google’s Tez app and other payment services do.

More so, in a beta stage, customers have to enrol for the service whereas, in the case of WhatsApp, it is being rolled out to just everybody on the platform. This, Paytm believes, is a case of clear arm-twisting by deep-pocketed WhatsApp to get a favourable policy change in its kitty.

At the time, it was also reported that Vijay Shekhar Sharma would also be petitioning the National Payments Corporation of India (NPCI), which has developed the UPI system, and even higher authorities to highlight this issue and to seek redressal of what he termed as an unfair playing field accorded to WhatsApp.

However, interestingly, not everyone in the digital payments space shared Sharma’s concerns. In fact, players like MobiKwik, PayU, and FreeCharge have taken digs at Paytm crying foul over being threatened unlike at the time of Free Basics when Indian Internet entrepreneurs rallied behind the cause.

In response to the controversy, NPCI released the following statement, “Currently, NPCI has given its consent to roll out WhatsApp BHIM UPI beta launch with a limited user base of 1 Mn and low per transaction limit. Four banks will join the multi-bank BHIM UPI model in phases (in the coming weeks) and full feature product shall be released after the beta test is successful.”

Paytm Vs WhatsApp: Who Will Be The Winner?

It is to be remembered here that while WhatsApp was readying itself to enter the digital payments space since last year, Paytm was busy transforming itself into a messaging platform by launching its instant messaging service, Paytm Inbox.

WeChat, the service that Paytm Inbox is modelled after, is a popular in-app chat service in China and is another Tencent-backed company. WeChat’s mobile payment service, WeChat Pay is the primary payment method for offline purchases in China, with 93% adoption rate across tier I and tier II cities.

Interestingly, both WhatsApp and Paytm are now in the race to emulate WeChat’s successful in-app chat service and payments model. And there is no doubt about the fact that WhatsApp wins hands down when it comes to its popularity as a chat platform. Hence it is anyone’s guess that winning the payments war with its simplistic interface will not be much of a struggle.

As per data by the RBI, “transactions using UPI increased 100 times from a modest 92,000 to 9.2 Mn transactions in the first nine months of operation.” The growth of UPI is evident, given that transactions through UPI reached an all-time high of 171.2 Mn in February. The value of transactions recorded was $2.94 Bn (INR 191 Bn), higher than ever before.

India’s digital payments industry, which is currently worth around $200 Bn, is expected to grow five-fold to reach $1 Tn by 2023, a report by Swiss financial services holding company Credit Suisse predicts. As per the report, within the said period, the value of digital payments will likely jump from the current 10% to over 25%.

The study attributed the growth to the increasing popularity of UPI enabled apps like Google Tez, while also stating that the entry of WhatsApp would likely give a major boost to the Indian digital payments market in the coming months.

How far that interface will be tweaked when the final version is launched as per NPCI guidelines is what everyone is watching now with interest.