Instant messaging app Whatsapp, has reportedly approached SBI and NPCI for enabling UPI payments on its digital wallet.
Inc42 reported in April 2017 that Whatsapp was looking to enter the payments space in India. The messenger platform is looking forward to utilise government-approved UPI for the same.
UPI is run by the NPCI, it was launched by RBI in April 2016. UPI is built over Immediate Payment Service (IMPS) for transferring funds using a Virtual Payment Address.
“Due to the complexity of the architecture, WhatsApp is in discussions with the State Bank of India, NPCI, and a few other banks to devise ways to integrate their systems with the bank and with NPCI,” a senior SBI official quoted. The official further added, “We are currently at the ‘proof of concept’ stage, looking at ways to integrate it with our back-end.”
Apart from SBI, the company is also in early discussions with several Indian banks, to implement UPI on its platform, as per the bank executives.
In order to make online transactions through Whatsapp, both the parties (banks and Whatsapp) need to merge their systems. So, when the transaction takes place the recipient will be identified by the contact details provided on the Whatsapp app.
“A messenger works in a manner of identifying an address box where the messages travel to instantly. Similarly, UPI instantly settles funds between one account holder and the other,” said a senior executive, who manages payments at a private sector bank. “WhatsApp will identify the recipient and the UPI layer will allow funds to get settled between the two parties”.
The company has decided to enable Aadhaar-based payments. “Some security protocols will need to be implemented around payments through WhatsApp. If it decides to use Aadhaar, then we will have to enable biometric authentication,” said another executive.
The Digital Payments Space
The payments space is heating up in India, post-demonetisation. The market already has some strong existing players when it comes to online payments, like FreeCharge, Paytm, Mobikwik. Global ecommerce giant Amazon has also shown serious interest in digital payments with AmazonPay, infusing $10.5 Mn in the entity through its parent holdings in Singapore.
Apart from traditional, pure-play players, Sweden-based TrueCaller has already linked up with ICICI bank for UPI Payments. Hike Messenger too has started UPI-based payments in collaboration with Yes Bank by launching Hike wallet. As reported, Hike tried to bank upon first mover advantage and claims to have become the largest UPI-based platform in India. Hike currently boasts of 100 Mn users and claims to transact over 40 Bn messages per month.
UPI has given a strong push to the government’s idea of digital payments after demonetisation. It has clocked 17.8 Mn transactions worth 7,000 Cr since being introduced. Meanwhile, Whatsapp has 200 Mn followers in India which automatically shows a huge potential for future digital payments. How WhatsApp plans to go up against incumbents such as Paytm, Mobikwik and newer entrants Hike Wallet, Amazon Pay remains to be seen.
(The development was reported by ET)