When payments regulator National Payments Corporation of India (NPCI) gave Facebook-owned messaging giant WhatsApp the go-ahead to launch its payments service after two years, it came with two caveats. First, the messaging platform can only open its UPI service (powered by the Unified Payments Interface) to 20 Mn users with an unclear provision for a gradual increase. Second, and more importantly, the NPCI will cap the total volume of UPI transactions at 30% for any third-party app provider (TPAP). This will be with effect from January 1, 2021.
Interestingly, the NPCI made both announcements on the same day and its implication was not lost on the country’s fintech ecosystem.
“WhatsApp already has 400 Mn users on its platform while UPI has a user base of 100 Mn or so. Allowing the former a free hand could have decimated all other players overnight,” says BharatPe founder and CEO Ashneer Grover. The Delhi-based fintech startup enables UPI payments at storefronts via QR codes.
But in a space already dictated by deep-pocketed industry behemoths like Google, Amazon, PhonePe (owned by Walmart) and Paytm (the Indian company backed by Alibaba and SoftBank), preventing market monopoly might not have been the only trigger behind the mandate. What concerned the regulator more was the possibility that a tech bug in WhatsApp Pay might put the entire UPI system at risk if it was allowed to function at full capacity, several experts have told Inc42. NPCI also harped on the same when it said that the 30% limit would help “address the risks and protect the UPI ecosystem as it further scales up”.
What is more surprising is the two-year-long wait and the constant regulatory prodding WhatsApp had to undergo to offer a service free of cost. But more on that later.
The core of WhatsApp Pay is built around conversational commerce – a new form of ecommerce where consumers can order anything from food to furniture while chatting with the brand’s bot.
Bots have been around for a long time, but businesses have mostly used them on websites and apps for customer communication. Now, these can be integrated with the messaging platform to usher in an all-in-one user experience where product cataloguing, ordering and payment happen on the whiteboard of its interface. It is a new approach, reminding users of a functionally built super app.