Facebook employees in India have been dogfooding WhatsApp’s peer-to-peer payment feature since mid-December and the chat company is likely to roll out the feature to 1% of its India users to begin with, in the first quarter of 2018, according to three sources.

WhatsApp is owned by Facebook.

As per government records, the Whatsapp has incorporated an entity called WhatsApp Application Services Ltd in Telangana and appointed former SIDBI executive Rakesh Rewari as a director alongside Anne Hoge Milliken, the company’s general counsel.

The launch isn’t much of a secret anymore as media reports have talked about the company’s plans as early as April last year. FactorDaily had reported in October that WhatsApp had partnered with State Bank of India, ICICI Bank and HDFC Bank and that a roll out was likely to happen in December 2017. The Economic Times reported on Thursday that Whatsapp plans to launch payments as early as next month.

“Some (Facebook employees) have been trialling the payment feature. It’s been working quite smoothly. Payments have been only peer-to-peer until now. No merchant payments have been enabled,” a source close to Facebook India said.

The reasons that Facebook-owned WhatsApp is taking its time to launch, according to industry observers, could be that payments is an operationally intensive business with the regulator asking providers to set up customer service channels and also the need to engage with partner banks to ensure a glitch-free experience.
Take for instance payments app PhonePe, the payments company owned by Flipkart. The company has over 1,000 customer service agents across the country to quickly resolve issues faced by customers.

Moreover, WhatsApp promises end-to-end encryption to its users. India’s banking regulator audits financial transactions every three months so these transactions can’t be encrypted. “It all works smoothly within the company network but when you have multiple parties and the scale of WhatsApp, there could be transaction failures,” said another source aware of WhatsApp’s plans.

We’ve reached out to WhatsApp and will update the story when we hear from them.

WhatsApp’s payment solution is built on top of the Unified Payments Interface, a new payment system backed by the National Payments Corporation of India. In December 2017, over 145 million transactions worth INR 13,174 crore were carried out over the UPI platform. That’s up from 105 million transactions worth INR 9,669 crore a month ago. A good part of this volume driven by cashbacks and referral schemes being run by companies to acquire new customers.

WhatsApp has over 200 million users in the country and is by far the most popular messaging app in India. According to App Annie’s report published this week, in India, over 71 billion hours were spent in the top 5 Social apps in 2017, with WhatsApp accounting for over 50% of those hours.

With the payments feature, the company is expected to get a sizeable share of peer-to-peer payments — a market led by the likes of Paytm. However, it may not be such a cakewalk for WhatsApp to enable merchant payments. Sameer Nigam, the co-founder of PhonePe, points out that WhatsApp is optimised as a chat interface and to bring in merchant transactions to the stream might affect the user experience.

“I can devote the entire real estate on my app screen to guiding customers to merchants. That’s going to be a limitation on WhatsApp,” says Nigam. He reckons that on WeChat, the popular Chinese chat interface that clocks over 800 million transactions a day, the majority of transactions happen through the account page on the app and not through the chat interface.

To address small and medium businesses, Whatsapp on Thursday rolled out Whatsapp Business in the UK, US and a few other countries. The app allows businesses to set up a Whatsapp account to talk to their customers. Interestingly, it wasn’t launched in India in the first wave, leading to speculation that it plans to do so along with the payments feature in India.

India’s payments market is heating up with top global players as well as homegrown companies locking horns over customers. Google recently launched Tez, a payments app that allows peer-to-peer payments. The company said it crossed 7.5 million downloads in a month from launch.

Amazon has launched Amazon Pay and is said to have big ambitions with the wallet. It is tying up with phone companies and insurers besides a whole lot of offline players to make it easier for people to pay. The company has also obtained a licence from the Reserve Bank of India in March 2017 to operate a digital wallet.
Flipkart-backed PhonePe also has big plans for the app. Flipkart has committed $500 million to grow PhonePe and is also vying the top spot.

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