WhatsApp’s UPI integration looking to disrupt the digital payments market in India – a unique threat to PayTm and other smaller e-payments players
WhatsApp is on its way to make its digital payment debut in India very soon. According to reports, Facebook is working with top lenders, including State Bank of India, ICICI Bank, Axis Bank, and HDFC Bank to integrate a unified payments interface (UPI) based solution.
UPI is a real-time payments system that allows transactions between banks. Currently at its beta stage (testing), WhatsApp is expected to go live by the end of February 2018. Even though this seems to be Facebook’s strategic move to bring businesses on its platform, the country’s established and smaller e-payments companies fear a unique threat in an already crowded and competitive ecosystem.
While the messaging platform is the latest entrant, Google has already launched its payment app, Tez, in the country. The four-month-old payment app is already creating fervour in the digital payments landscape, with transactions crossing the likes of Axis Bank, one of the top digital players among banks.
There has been a massive surge in digital transactions since the introduction of the government’s demonetisation program in November 2016.
Moreover, with over 200 million active monthly WhatsApp users in India, the social media giant is looking to monetise its messaging service by adding services and solutions to enable businesses to connect with customers. It is interesting to note here, that even though India’s e-payments market is expected to grow in the coming years, most e-wallet operators aren’t profitable in India yet.
In fact, some who have been issued licenses by the Reserve Bank of India are still evaluating the situation before setting up operations in the country.
Meanwhile, the entry of bigger players in an already swarming payments landscape, including over 60 non-banking players such as Paytm, Mobikwik, Amazon Pay, and Flipkart (PhonePe), means the end of the road for smaller, struggling e-payments players.
On the flip side, it is being speculated that users will be apprehensive to use the messaging platform for online payments initially, even though WhatsApp scores higher than other apps in terms of engagement.
As a result, both Google and Facebook may have to find alternative ways to lure the user, by providing tailored offers and cash backs.
On the other hand, the entry of WhatsApp payments could mean an explosion in transactions in the digital money landscape. Established players such as Paytm are also feeling the push, and fears that its position as the largest digital payments brand in India will be compromised with the entry of WhatsApp payments.
GlobalData expects consolidations to be the force in the next few years, with the bigger players focusing on opportunities to expand their footprint in India and other markets. In the meantime, smaller e-payments players are tapping into unidentified opportunities to stay relevant in the market.
For instance, Oxigen is looking for growth opportunities in the remittance market, while MobiKwik is collaborating with merchants and banks instead of focusing on peer-to-peer payments alone.
Therefore, creating a compelling case for people to use digital money is becoming absolutely necessary for smaller players, while bigger players are taking advantage of their wide user base.