WhatsApp Payments

The launch of this money transfer feature was first announced by WhatsApp, with a few leading individuals citing numerous regulatory concerns. Subsequently, NPCI (National Payments Corporation of India), the parent body of India’s UPI, issued a statement that allowed limited launch of WhatsApp Payments for beta testing, subject to various terms and conditions. For starters, the beta testing launch will be available initially to only a million WhatsApp users across India and those users will be required to use the latest version of the messenger application in order to use the functionality. Even more importantly, NPCI also restricted the number of banks participating the beta test to four – State Bank of India, ICICI Bank, HDFC Bank and Axis Bank. According to some though, another bank in the UPI network, Yes Bank will also be part of the WhatsApp Payments beta test but is supposed to be included at a later date. As one might notice, this is a fraction of the total of 72 banks that are currently part of the UPI network. That said, these restrictions might just be temporary and the addition of new features may lead to expansion of the platform’s utility.

NPCI has also released a statement stating all the features that WhatsApp UPI payments must include in order to have a full scale release in India. Some of these features are – interoperability including the ability to send/receive money using any BHIM UPI ID as well as the capability of reading and generating Bharat QR within the app itself. NPCI stressed that these features would have to be mandatorily incorporated in order to ensure the full scale release of WhatsApp pay within India at a later date.

Ever since the demonetization exercise, the push to go cashless has been gaining strength and there are already a few incumbents that WhatsApp UPI payment will have to compete with. The leading UPI based payments apps currently available in India include BHIM UPI App, Google Tez, Phone Pe, Axis Pay and SBI Pay. This is of course not the complete list as the UPI framework currently connects a total of 72 banking entities in India and almost each of these banks has its own UPI app. Special mention must be made of PayTM which apart from being a wallet also provides a UPI option and is currently the most commonly used peer to peer payment solution in India. The one advantage that WhatsApp can claim over these and others is that a few million smart phone users across India already have the app installed on their phones. Thus, if no separate app is required for this added benefit, the potential number of customers is huge. For now, the payment/receipt options are limited but that can of course change in the near future.

As the new app does not need a specific WhatsApp payment gateway, no separate app is currently required to use the new service. In case of those who have been chosen as a beta tester for the WhatApp Payments service, the payments option will appear under the settings menu of any WhatsApp chat provided the app is up to date. In this section, the source bank account for the payment needs to be added. Under the payments submenu, there is a bank accounts option where the user can add the details of his/her payment account. After adding key details including account number, account holder name, IFSC, etc., one needs to tap on accept and continue to move on to the subsequent step.

The next step is the verification of the account information entered in the previous step and this is done via SMS. As a result, it is mandatory that the phone number you are using for WhatsApp is the same as the phone number that your chosen bank account is linked with. Otherwise, the verification via SMS will fail hence the user will be unable to use the WhatsApp UPI Payments functionality. In case one has multiple accounts linked with the same number, the selected account will show up along with all others as a list pending UPI OTP verification. On completion of the verification, the user will see the UPI setup complete screen that confirms that the chosen account has been linked to the WhatsApp pay platform. The user can repeat the above steps to add more accounts however one should remember that as of now not all banks in the UPI network are supported by the Whatsapp UPI app.

After one or more bank accounts have been linked with WhatsApp, the user can send money using the chat-based payment functionality. However, an additional factor to consider here is the fact that as there is no separate UPI Payments gateway, the person is supposed to be receiving the payment via message and also needs to register his/her banking account through the app. If both the receiver and sender have registered with WhatsApp pay, then the sender can simply send money via the chat window similar to sending a message. What’s more, a single sender can easily send money to multiple receivers through a group chat provided that all participants in the group have registered with WhatsApp pay. The following are the steps that a user needs to complete in order to make a WhatsApp UPI payment –

Step1. The user needs to open the chat window in a manner similar to sending a message.

Step2.  Then the user needs to click on the Attach/Add (+) button to view different options. If the user account is linked with the pay system, an option named “Payment” should show up along with the usual options like document, camera, gallery, audio, location and contact.

Step3. Upon clicking the “Payment” option, the user gets directed to a page where he/she can input the amount to be sent to the chosen recipient. An additional option on the page allows the user to add a message/note which will be delivered to the recipient along with the money.

Step4. In order to authorize the payment, the sender needs to input the UPI PIN of the bank account from which the amount is to be debited.

Step5. When the payment is completed, the amount sent and any message attached to it will show up as part of the conversation between the sender and receiver.

If the sender has multiple accounts linked to WhatsApp payments, any of these can be selected before making the payment. Also, the user gets the option of accessing a transaction log under the details of all money sent/received from the app. This is available under the history option in the settings menu.

In its present form, WhatsApp Payments is a completely peer to peer money transfer system. As of yet it is not possible to make purchases or pay a business via the app. Going forward, the software might decide to incorporate Bharat QR code based payments and Bharat QR code generation options that might resolve this issue. In fact, NPCI has already made clear that these and other interoperability features and many additional security features will be mandatory before a full scale launch is permitted. This in addition to the fact that the number of banks as well as users allowed to participate in the beta test features additional limitations that users will have to keep in mind when using the services.

But, no one can deny that the possibility of disruption is huge with respect to the current players in the UPI network. While most new players will tend to have a problem getting new customers, this app is already a household name and many will definitely signup for this new feature. Though not all initial adopters are expected to continue using the service for a long period of time, in terms of sheer numbers, WhatsApp payments can hope to get well ahead of its competitors at least for a short time after full-scale launch of its payments service.