INDIA: WhatsApp Payments Service Gets Regulatory Approval

WhatsApp has received regulatory approval to roll out its digital payments service in India. The National Payments Corporation of India (NPCI), the country’s retail payments regulator, granted approval to the Facebook-owned service in light of the rapid rise in the use of digital payment systems. This is, in part, because these simple and low-cost payments system have delivered a significant boost to small businesses and online retailers.

With more than 400 million users, India is WhatsApp’s largest market and, although this latest approval initially limits the service to a maximum of 5% of its domestic users, this is still a big increase from the maximum of one million users the approved for the beta version. The approval comes two years after the launch of the beta and follows assurances from the messaging platform that it will comply with regulations that require all payment-related data to be stored locally.

WhatsApp’s payment service will be available in 10 Indian regional languages and will make use of the Unified Payments Interface (UPI), India’s real-time payment system. The platform is said to allow anyone to receive money across a variety of different apps, with Google Pay, Walmart-owned PhonePe and Paytm currently its biggest clients. For its part, WhatsApp is working with five of India’s leading banks – the State Bank of India, HDFC Bank, ICICI Bank, Axis Bank and Jio Payments Bank – in a bid to optimise its payments processing procedures.

In another significant move, the NCPI has announced, in a supposed bid to safeguard innovation and competition, that no single app will be permitted to account for more than 30% of all monthly UPI transactions . Although this restriction will come into effect as of January 2021, existing players will have up to two years to comply. It is expected that this requirement will have the most impact on PhonePe and Google Pay, with each processing more than 40% of all UPI transactions in October this year.