Whatsapp’s P2P payment services in India could fundamentally shake the competitive landscape

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Facebook owned instant messaging application Whatsapp plans to launch P2P payment services on its platform. The company is in talks with National Payments Corporation of India (NPCI) for utilizing cross banking payment system UPI, which is open to third party service providers. There have been a series of launches in India over the last two years, resulting in intense competition. In recent times, cashless transactions have gained momentum in India, especially after demonetization towards end of 2016.

According to PayNXT360, P2P transfer market transaction value was US$ 7,681 million in 2016 and expected to reach US$ 5,31,896 million in 2021. From 2015 to 2016, the growth rate achieved was 152.6% while expected CAGR from 2017 to 2021 is projected to be 120.6%.

Fund transfers through mobile banking and Immediate Payment System (IMPS) showed the highest increase during this period. Mobile banking transactions have gone up nearly 200% in the last two quarters.

With all these positive trends that are increasing in India, introduction of payment service and fund transfer is likely to turn into a profitable venture for Whatsapp. Until now Whatsapp has not made any significant revenue. With this approach, Whatsapp could generate a stable revenue stream in coming years.

Moreover, it is going to increase competition in mobile wallet segment which is primarily dominated by Paytm. Currently Paytm is the largest market share holder in Indian digital wallet segment. However, it has a customer base of 160 million in comparison to 200 million users of Whatsapp. Once the instant messaging app launches the payment facility, customers will be readily adopting to the services because of existing knowledge regarding the application and its convenience. The existing customer base for Whatsapp coupled with remodeled regulatory framework is expected to influence faster adoption of the payment services.

To know more and gain deeper understanding of mobile payment industry in India, click here.