WhatsApp has launched in India and looks set to become its leading digital payments vehicle.
Having conducted ethnographic research in China on the WeChat phenomenon last year, the emergence of WhatsApp as a mobile payment provider in India has grabbed our attention. Particularly, considering it marks a Facebook-owned platform’s most notable move into the digital payments sphere. And, with the Indian government supporting services that remove cash transactions from their economy could we see the emergence of another ‘Super App’?
The insight we gathered from our WeChat study confirms that when social platforms plugin APIs that facilitate payments, you can expect rapid growth and big changes to consumer attitudes and behaviours. One of WeChat’s most notable moments in its development came from the digitisation of the transfer of Hong Bao (red envelope) at Chinese New Year – the history of which stretches back over two millennia.
With a recent Google-BCG study indicating that the Indian digital payments industry will grow to $500bn by 2020, contributing to 15% of GDP – the economic rewards from WhatsApp’s move to counter existing providers like Paytm and Tencent-backed Hike could be huge.
WhatsApp has 200M MAU users in India – making this its largest market - and the Payments platform beta currently has over 1M users and is supported by the government backed UPI (Unified Payment Interface) which encompasses many of India’s leading financial providers.
WhatsApp doesn’t have the sole point of access to the UPI but, it’s the biggest platform with the strongest financial backing. In an emerging industry still struggling to turn profit some smaller existing providers might be unable to compete – something which not everyone is happy about.
Despite the current lack of B2C transactional capability Vikalp Shani the CTO of India’s leading online travel provider Goibibo has cited the ease with which WhatsApp could become a big payments platform due to people’s familiarity with the application.
With targeted messaging by businesses already being rolled out it won’t be long before we see big commercial entities taking advantage of the payments ecosystem WhatsApp has created – the key to the commercial success of which will come from keeping the tone of the messaging in line with the nature of the platform.
What remains to be seen, is whether smaller merchants and businesses could leverage WhatsApp Payments as effectively and easily as vendors did with WeChat in China. As yet, it remains unclear whether WhatsApp has plans to integrate its QR code functionality with payments. As we know, this capability was the linchpin of WeChat’s success in creating widespread participation by merchants.
WhatsApp has a clear opportunity to eat the long-tail of the payments landscape in India. Its user base is large, people are familiar with the platform, and the government has actively allowed them a slice of the digital payments pie. But, currently, it does lack some of the core features its native competitors and WeChat possess.
Over the coming months, as the platform grows and matures, it’ll be interesting to see how WhatsApp extends its range of features to capture B2C digital payments and what other branded APIs it can funnel in – this will facilitate the creation of a more holistic customer experience with the service.
We’ve been saying for a while that payments-enabled social apps, like China’s WeChat, will start to make a move to the West. With Facebook making its opening payments gambit via WhatsApp in India, it feels like another piece of evidence to support our view. Whatever happens next it seems sensible for Western brands to pay close attention to what WeChat, WhatsApp, and other emerging platforms are doing in developing economies.