After operating in a beta mode for over two years, WhatsApp has finally received regulatory approval from the National Payment Council of India (NPCI) to unroll its payment feature to a wider user base in India.
WhatsApp’s application with Indian regulators, including NPCI and Reserve Bank of India, was pending as the Facebook-owned messaging platform has been working on complying with India’s data-localization rule. As an interim solution, it launched its payment feature to one million users until it got all the approvals.
While WhatsApp has got the green signal from NPCI to launch its payment feature on India’s digital payment infrastructure UPI (Unified Payment Interface), the rollout will happen in a “graded manner.”
“WhatsApp can expand its UPI user base in a graded manner starting with a maximum registered user base of twenty (20) million in UPI,” said NPCI.
Read this: Digital payments over India’s UPI doubled in a year, crossing two billion mark
This is still only a fraction of the users who would be able to use WhatsApp Pay to transfer money. WhatsApp claims to have 400 million users in the country, making India its largest market globally.
“We’re excited to join India’s campaign to increase the ease and use of digital payments, which is helping expand financial inclusion in India. 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,” WhatsApp said in a statement.
NPCI’s much-awaited nod to allow WhatsApp to extend its payment feature was preceded by another important announcement. NPCI said it would cap UPI transactions for third-party payment apps to ensure that no single app processes more than 30% of all UPI transactions a month.
“The cap of 30% will be calculated basis the total volume of transactions processed in UPI during the preceding three months (on a rolling basis). The existing TPAPs (third-party app providers) exceeding the specified cap, will have a period of two years from January 2021, to comply with the same in a phased manner,” NPCI said.
This move might lead to a jump in failure rates on popular UPI-based payment apps such as PhonePe, Google Pay, and Paytm. Since users wouldn’t know if any of these platforms have crossed the 30% threshold, the transactions would not go through. This might benefit NPCI’s own payment app BHIM, which has seen stunted growth till now.
Walmart’s PhonePe and Google Pay currently dominate the UPI-based payment facilitating close to 80% of transactions. Recently, PhonePe claimed a 40% market share in UPI payments, it has emerged as the top payment platform, with Google Pay sliding to number two at 38%.