Facebook’s WhatsApp has broken down a stubborn barrier and has finally earned the Indian government’s approval for the apps use as a payments platform.
This is a big deal for Facebook. India is a huge market for WhatsApp, with an estimated 400 million users. This dwarfs Brazil, its next largest market with more than 99 million users. Earlier this year, WhatsApp earned Brazil’s approval for payments, only to have the decision pulled back a week later.
Facebook has been trying for some time to get regulatory approval from India. Notably, two of Facebook’s global payments rivals are already operating in India. Walmart via its PhonePe service and Google Play each have earned access to India’s Unified Payments Interface. As a result, the two Facebook rivals have amassed a combined 40% share of the payments market in India.
Tough Love from India’s Regulators
India’s regulators have taken a tough line with WhatsApp throughout this process. Even now that they have granted WhatsApp access to the UPI, they are requiring a phased-in approach. Ostensibly, this is to protect the integrity of the infrastructure. It seems more likely that the regulators fear WhatsApp, with its massive user base, will rapidly gain a dominant position in the market.
The National Payments Corporation of India, which regulates the UPI, has also imposed new restrictions that prevent any single player from using more than 30% of the UPI’s total transaction volume.
Despite the constraints, Facebook was clearly jazzed enough by the news for founder Mark Zuckerberg out there with a video proclaiming the victory.
Watch | Mark Zuckerberg says, “Now you can send money to your friends and family through #WhatsApp as easily as sending a message."
— The Indian Express (@IndianExpress) November 6, 2020
So What Does This Mean for Facebook?
In a blog post, Facebook naturally casts the deal in missionary terms.
“In the long run, we believe the combination of WhatsApp and UPI’s unique architecture can help local organizations address some of the key challenges of our time, including increasing rural participation in the digital economy and delivering financial services to those who have never had access before.”
From a commercial standpoint, this deal has a huge potential upside for Facebook and WhatsApp. The messaging service has a massive global audience, including 50 million small businesses worldwide. Many SMBs, particularly in emerging markets, use WhatsApp as a de facto eCommerce channel. Allowing payments though the platform in WhatsApp’s largest market moves the app a little bit closer to global super app status. And that, ultimately is what we believe Zuckerberg’s vision is for the messaging platform.
A Super What?
So what’s a super app? Essentially it’s a single app that takes the place of multiple apps. China’s WeChat is a classic global example. Other apps around the world are also trying to become super apps. Most start off in a few key categories. These include messaging/chat, payments, ride-hailing, and delivery. From these starting points, they can branch into any number of adjacencies, from online banking to dating to eCommerce.
Adding Payments is clearly a pivot point for Facebook to move WhatsApp closer to this goal.