FP ExplainerApril 14, 2022 17:04:17 IST
Messaging service WhatsApp has received regulatory approval to add another 60 million users to its payment services in India.
The National Payments Corporation of India (NPCI) on Wednesday approved the meta-owned service, more than double the user base of its payment services.
Earlier, WhatsApp was allowed to expand its payment services to 40 million users in India.
Let’s find out what is WhatsApp’s payment service and what this NPCI approval means:
What is WhatsApp payment service?
Known as WhatsApp Pay, it is an in-chat payment feature that allows users to make money transactions via WhatsApp to people on their contact list.
WhatsApp Pay is a UPI-based payment service that allows users to both send and receive money.
Read more: What is WhatsApp payment service and how does it work?
The messaging app received approval from NPCI in 2020 to phase out digital payment services.
Until now, the WhatsApp pay messaging service was available to over 40 million users.
What does NPCI approval mean?
With the latest approval from NPCI, 100 million WhatsApp users will be able to make money transactions with each other using payment services.
According to a report Indian ExpressIn March alone, WhatsApp payments accounted for only 0.05 per cent of UPI transactions, with 2.54 million transactions worth Rs 239.78 crore.
To put it this way, PhonePe, another payment service, recorded 2.5 billion transactions in the same month, followed by Google Pay which saw 1.8 billion transactions.
With NPCI approval, WhatsApp may launch its payment service to attract more merchants to the platform.
As a result of NPCI’s clearance, WhatsApp will be able to deal with competitors such as Walmart-backed PhonePe and Google Pay.
According to the NPCI website, a total of 25 third-party application providers, including WhatsApp, are authorized to provide payment services at UPI.
While WhatsApp has asked NPCI to allow it to expand payment services across its entire user base without caps, NPCI has maintained that the messaging app cannot outperform its level-playing field with a huge user base of 500 million people.
Problems of WhatsApp Pay in India
Even after launching its service to 1 million people in 2018, WhatsApp has been embroiled in legal and regulatory issues with the RBI, NPCI and the Ministry of Electronics and Information Technology for launching its UPI-based payment services across its customer base.
WhatsApp was asked to set up data localization, local complaints officers and home offices. The company has met the demand for establishing data localization in India.
In an affidavit filed by the central bank in the Supreme Court (SC) in 2020, NPCI informed the RBI in June that it was satisfied with WhatsApp’s compliance with the regulator’s data storage regulations.
According to Indian Express, A lawsuit was also filed against WhatsApp in the Competition Commission of India alleging abuse of its influential position to launch WhatsApp Pay in India. However, the antitrust panel dismissed the case.