WhatsApp launches in-chat payments service for businesses in India

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Hundreds of millions of WhatsApp users in India will be able to pay for products and services through the chat app, as its parent company Meta seeks to generate more revenue from the messaging service in its biggest market.

Shoppers from Wednesday will be able to buy products and services from businesses using credit and debit cards, WhatsApp Pay and India’s public digital payments network UPI, the company said. Companies will not be charged for the in-app payments but Meta stands to benefit from an increase in businesses using WhatsApp, who pay to message their customers.

“We’re making it easier to complete a purchase directly in the chat,” WhatsApp said in a blog on Wednesday as a business messaging summit in Mumbai got under way.

“The goal is to help businesses make it more convenient for customers to pay right within a chat, which will help them close more sales,” added a WhatsApp spokesperson.

The launch comes as the social media group seeks to facilitate more ecommerce across its platforms as an additional revenue stream to advertising. Enabling merchant payments also allows the platform to gather more data to help it target and personalise existing advertising.

It mirrors similar moves in Singapore and in Brazil. India, however, which this year overtook China as the world’s most populous country, would be a bigger market than either.

WhatsApp, which has 400mn monthly users exchanging messages in India, has the potential to rank “among the top three digital payments apps in the country”, said Arvind Singhal, chair of Technopak Advisors, a retail consultancy.

The chat app has become increasingly important to Meta’s efforts to make more money from its platforms. Companies are charged for delivering marketing or customer service messages to their customers via WhatsApp, and to run ads on Facebook or Instagram that take a potential customer directly into a WhatsApp chat with the company.

Meta founder Mark Zuckerberg said in the Facebook parent’s first 2023 quarterly earnings call that these so-called click-to-message ads had hit a “$10bn revenue run-rate”.

WhatsApp, which invested $5.7bn in billionaire Mukesh Ambani’s digital unit Jio in 2020, launched its first in-app customer business payments service with the telecoms group’s ecommerce offering JioMart last year.

Isha Ambani, the billionaire’s daughter and the director of Reliance Retail, said last month that the number of customers shopping at JioMart inside a WhatsApp chat had increased “9X” since the launch.

WhatsApp’s announcement comes weeks after India’s long-delayed data protection bill passed last month. The legislation excludes rules on data sharing by companies and is widely considered more business-friendly than earlier drafts. For tech companies, the eased provisions are “a big monetising opportunity”, said Debanshu Mukherjee, co-founder of the Vidhi Centre for Legal Policy.

On top of facilitating merchant payments, WhatsApp has also begun rolling out features to enable money transfers between individuals, known as peer-to-peer payments, in recent years in markets including Brazil and India, though these have been beset by regulatory difficulties.

Some critics say WhatsApp has been slow to capitalise on the promise of WhatsApp Pay, peer-to-peer payments that the company began testing in India in 2018 but that ran into government concerns over data storage.

Even after clearing regulatory hurdles that allowed it to roll out peer-to-peer payments across India in 2020, WhatsApp’s progress appeared to be sluggish, said Ram Rastogi, who helped design UPI and is now chair of the Fintech Association for Consumer Empowerment group.

“There’s nothing wrong with the product,” Rastogi said. But he added that WhatsApp did not throw its marketing muscle behind the payments offering since “there was no intention of making it happen”.