Facebook ready to enter payments in India, begins beta with recharges. Messenger looks next

Sunny Sen April 17, 2018 6 min

Updated on June 15: American social media giant Facebook is likely testing payments over its chat platform Messenger in India – if one is to go by its user interface inviting users to the platform. Facebook called it “a technical error” but two sources said it was clear the company is working towards payments on Messenger, as FactorDaily had reported in April.

“It is very initial days but Facebook is looking at leveraging the Messenger platform for payments and India may not be excluded from its plans,” said a company executive, asking requesting anonymity because he is not authorised to speak with the media.

A second source close to the company confirmed this.

“Due to a technical error, some people may have seen a message suggesting they could send and receive money to each other within Messenger. This message was intended to be shown only in places where peer-to-peer Messenger payments is available, and was shown to people in India by mistake. We are working on fixing this, and apologize for any confusion,” a Facebook spokesperson said on email.

Peer-to-peer Messenger payments are currently available only in the US, UK and France.

Messenger’s chat windows, accessed by FactorDaily, show that a user can send and receive money on the instant messaging platform – once added as a friend. “Add them so that they can message you, and you can send and receive money, make voice calls and video chats, and more in your conversation,” reads the text to connect on Messenger.

“It would not have been visible on the chat page if Facebook wasn’t working on payments inside Messenger,” said the second source. However, after we added the person as a friend, we could not find an option to make payments – suggesting Facebook had not opened up the option to public in India yet.

Whatsapp, fully-owned by Facebook has got a Unified Payments Interface licence in India, which allows it build a platform that will help in facilitating payments. It is already beta-testing the platform with ICICI Bank.

A senior source in NPCI, short for National Payments Corporation of India, told FactorDaily Facebook hasn’t yet approached it for permissions to launch or test payments on the Messenger platform. NPCI is an umbrella organisation for retail payments in India.

Facebook is still away from a beta test in India with payments, said the first source. “In its current form there are a handful of people working on payments on Messenger,” the person said. “Even to roll out a beta the company will require regulatory permissions.”



Updated on April 23: After publication of this story, a Facebook spokesperson responded saying that the company is testing recharges on Facebook and not on Messenger, as we had reported. “Recharges is discoverable through Marketplace and we want to position it as a Marketplace offering,” the spokesperson said. “Messenger P2P payments are only available in the US, UK and France. We don’t have any other plans to share at this time.”

FactorDaily went back to its sources, who reconfirmed that Facebook will allow payments to merchants and recharges on Messenger. “It may take time but it will happen eventually. There are a number of brands on Messenger… they will get full value only when a transaction can be completed,” one source said. Yet, to be sure, it is common in tech companies to shelve or change direction in product development after beta testing.

Please read the story with this context.

We regret the error in our reporting that recharges were being tested on Messenger and have updated our story below for that mistake.



The story of April 17: Facebook has been hitting the headlines over allegations of violating user privacy and misusing personal data. But, braving the flak, the social media giant continues its march in India, one of its top global markets with more than one-tenth of its 2.1 billion users.

The latest is Facebook’s move into payments in the world’s second-largest market by internet users. Two sources in the know of the development told FactorDaily that Facebook has been quietly working on building a payments platform, which is independent of WhatsApp payments. “The platform will be separate from WhatsApp and will allow peer-to-peer and peer-to-merchant payments,” said the first source.

The company has already launched a beta version of recharge payments for mobile phone and other prepaid services. “Recharge is a good way to test the market. The transaction values are small but the volumes are high,” said the second source who has seen a demo of the product.

“Recharges is discoverable through Marketplace and we want to position it as a Marketplace offering,” a Facebook India spokesperson said.

The big opportunity is in a payments platform that will allow buyers and sellers to fulfil commercial transactions on Facebook Marketplace and Facebook Messenger.

Marketplace allows users to buy and sell products within Facebook communities. On Messenger, brands can target, connect, and transact with users. “Online commerce really works when you can complete the entire transaction without getting out of the app,” explains the first source.

For example, if a user is connected with BigBasket on Facebook Messenger, he or she can buy grocery from inside Messenger. In the Marketplace, the buyer will not have to connect offline with the seller and will be able to complete the deal online. To be sure, the use cases are still on the drawing board and might change before the final launch.

Facebook’s entry into payment comes in quick succession of the launch of WhatsApp payments, a UPI-based payment service. “They run as separate companies and they want to attack (the payments business) from all the sides,” said Kunal Shah, founder of Freecharge, the mobile wallet firm that was acquired by online retailer Snapdeal before being sold to Axis Bank. “When Facebook wanted to compete with Snapchat, it launched Instagram story, Facebook stories… all at once. They have the largest user base.”

China shut, India open

The opportunity, if successful, in payments is unique. Mobile payments in China – where Facebook doesn’t have a presence – went through the roof in 2017 totalling to about $13 trillion. Leading the charge are platforms such as WeChat which enables payments within the chat platform and providing an easy switch from cash to digital payments, especially for first-time users.

India could be next in line. Investment bank Credit Suisse predicts digital payments in India will grow to $1 trillion by 2023.

Facebook has already launched payments on Messenger in the UK and France. A year ago it had launched peer-to-peer money transfer in the US. “But nothing beats China and India… Mobile payments haven’t been successful in the US,” said the first source.

According to the report Leading the Cashless Charge by consultancy firm Deloitte, digital payments in India grew from Rs 1,329 trillion to Rs 2,295 trillion in the five years ending 2016-17. Prepaid Payment Instruments (PPIs), as a part of digital payments, grew at a compounded annual growth rate of 97% in the period and account for 10% the volume. Mobile wallet is the largest category within PPIs.

All this will appeal to Facebook. “Any app or any platform finds payments as a good opportunity to add direct revenue from users. Advertisements are a form of derived revenue,” said Faisal Kawoosa, analyst with Cybermedia Research.

The market is, however, cluttered with a large number of global and local players – the largest being Paytm backed by Alibaba. Google Tez, Amazon Pay, Flipkart’s PhonePe, and MobiKwik are the others. WhatsApp, too, wants to solve a similar problem in peer-to-peer and peer-to-merchant money transfers.

It is still early days with digital payments making for just a couple of percentage points of total transactions in the country. “Facebook won’t be available cross-platform. Companies like Paytm will still find a room to be present across several platforms. It will always be intelligent for other companies to partner with a stand-alone platform like Paytm,” said Kawoosa.

The talent graph

Four months ago, Facebook hired Sunali Rohra from Visa as the head of payments partnership for India and South Asia. Rohra played a role in the launch of Bharat QR and will play a role in building partnerships with various government organisations and private players in the financial ecosystem.

“Payments is not an easy business to build… Only someone with exposure in the financial sector and in mobile or digital payments can execute these roles,” said the second source.

Facebook is also looking for at least two senior-level executives to drive the payments business in India. One is the role of strategic partner manager, payments partnerships. According to its job description, the person will have to work with “product, engineering, legal, marketing and operations teams to develop new capabilities, improve user experience, and reduce barriers that prevent people from buying what they want”.

The other role is of solutions architect, payments and financial services. Facebook in its job description said, “payments and financial services are a key part of our mission to build community and bring the world closer together”.

The payments and financial services partner engineering team is responsible for developing and growing financial services relationships with banks, payment networks, schemes and financial institutions across the India ecosystem. “The ideal candidate will combine strong product skills and API design experience for online payments and financial services, ensuring integrations with our strategic partners in India are successful and drive impact,” the role description said.

India’s payments ecosystem just got more crowded with another giant stepping in. The battle in digital payments, it seems, is just about beginning.


Visuals: Rajesh Subramanian
Updated at 12:37 pm on April 23, 2018  to correct an error in the headline and copy that beta testing of the payments feature was on Messenger. Also, to include a Facebook spokesperson's comments and fresh reporting from FactorDaily's sources at the top of the story.

Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.