WhatsApp opens colossal Indian payments market

Posted on Nov 22, 2020 at 4:38 PMUpdated Nov 22, 2020, 5:21 PM

After its rout in Brazil, WhatsApp opens wide the doors of the gigantic Indian market. The messaging platform, which was blocked by Brasilia just after its launch for reasons of free competition, obtained the regulatory green light from New Delhi to provide payments to 20 million customers.

For two and a half years, it had been operating in test mode with just 1 million of them, while it has 400 million users per month in the country for its email services. The government was opposed to its launch until WhatsApp provided sufficient guarantees on the storage of user data in India. An increased concern after the hack last year of the payment platform by the Pegasus software of the Israeli firm NSO on data targeting in particular Indian human rights defenders.

After reviewing its policy and having it audited by Deloitte, WhatsApp has finally obtained authorization to operate on a larger scale. The decision also comes after Facebook, the parent company of WhatsApp, teamed up in April with a leading partner in India: it invested $ 5.7 billion for just 10% of Jio Platforms, digital subsidiary and first the country’s mobile operator with 388 million customers, owned by Reliance Industries, a private conglomerate of Mukesh Ambani, the richest man in the country. Its banking platform, Jio Payments Bank, is one of WhatsApp’s partners in payments in India.

Limit to 30% market share

Unlike Brazil, reluctance in India was less about competition risks. Google Pay and PhonePe, a subsidiary of American distributor Walmart, alone already control 40% of these payment systems, which have accumulated a record 2 billion transactions in a single month for the first time in October.

The arrival of WhatsApp also comes as New Delhi will introduce new regulations to limit dominant positions in these services. From next January, said the National Payments Corporation in India (NPCI), no single platform will be able to control 30% of the volumes on this mode of transaction. Providers already active like Google will have until January 2023 to comply. For newcomers, the rule is imposed from January.

The implementation will however be complex. It will involve limiting the use of these payment services per user or in the number of transactions per hour. Neither platform will also be able to know if it crosses the ceiling of 30% market share, because it will not know the volume of its rivals, underlined Deepak Abbot, a payment systems veteran in India, founder of fintech Indiagold, interviewed by the benchmark daily “Times of India”.

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