Facebook has taken a major step forward in its presumed ambition to become a ‘super app’, in the style of Chinese peers such as WeChat, with the news a WhatsApp payments service planned for India has been approved. With 400 million Indian WhatsApp users, many of whom do not have access to proper banking and other financial services, the giant country is seen as the perfect testing ground for app-based payments.
Facebook has major ambitions in India, where it is competing head on with Chinese competitors like WeChat and Alipay. It recently agreed a multi-billion investment deal to take a 10% stake in Reliance Jio, the country’s biggest telecoms country. Owned by Mukesh Ambani, India’s richest individual, Jio is aggressively moving into ecommerce and Facebook will look to how to tie its new mobile payments service into that strategy.
Facebook first announced its plans for app-based payments in India in 2018, but was delayed by regulatory demands that payments data must be hosted locally, rather than in the U.S. India’s regulators also insisted data be kept completely distinct from Facebook and general WhatsApp chat data.
Facebook CEO and founder Mark Zuckerberg commented via video-link:
“I’m excited to share today that WhatsApp has been approved to launch payments across India. So now you’re going to be able to easily send money to your friends and family through WhatsApp just as easily as sending a message, there’s no fee and it’s supported by more than 140 banks.”
WhatsApp is now expected to play a key role in ecommerce platform JioMart, Reliance’s online groceries business. The business already started using WhatsApp in an online booking service rolled out in April. JioMart’s main competitors for share of the Indian online groceries market are Amazon and Walmart-owned Flipkart.
The WhatsApp payment service will also be directly competing against PhonePe, which is also owned by Walmart, Google Pay and local Alibaba and SoftBank-backed Indian company Paytm.
Facebook is making a concerted effort to push more into ecommerce and facilitate shopping through its apps. It is hopeful that a major plus of that will be more data on user spending patterns, which will help it better target advertising. As well as the new WhatsApp-based service, Facebook is also rolling out the similar Facebook Pay through its main Facebook app and Messenger. Digital storefronts functionality that allows for in-app shopping has also been introduced on Facebook and Instagram.
Mexico and Indonesia are the next countries being targeted for the launch of WhatsApp payments, though no timeline has been publicly announced. A Brazil launch took place in June but was shut down by regulators on competition concerns after just one week.
All app-based payments service in India run on the country’s Unified Payments Interface (UPI). India’s UPI was developed by the government as a way to allow people in a country known for its ‘unbanked’ to make cheap, instant transfers between bank accounts and e-wallets.
There is also speculation that there could be an opportunity for Facebook to subsequently involve Libra, its cryptocurrency project, in the WhatsApp Pay ecosystem.