Facebook’s messaging platform WhatsApp appears to be aiming at a more lucrative market in India, as the company disclosed in its filings with local regulators that it is looking to provide credit or loan facilities to its users in the country.
WhatsApp recently got the nod from National Payment Council of India (NPCI)—after struggling for two years to get an approval—to roll out its UPI-based mobile payment service WhatsApp Pay to all its 400 million Indian users. UPI (Unified Payments Interface) is an India government initiative developed by NPCI that enables peer to peer or person to business money transfer in real-time.
This news comes at a time when WhatsApp’s parent company Facebook recently bought a 9.99% stake in Reliance, which is expected to result in deep synergy between their platforms. Reliance Retail and its e-commerce venture Jio Mart would use WhatsApp to connect offline merchants with online buyers who would be urged to pay using WhatsApp Pay.
In the future, once it gets an approval from authorities WhatsApp Pay would explore providing credit to these users transacting on its platform. According to a joint report by Omidyar Network and BCG, digital lending market is set to grow to USD 100 billion by 2023.
Companies such as Paytm—the most valuable Indian startup—Walmart’s PhonePe, Mobikwik, Ola Money, Xiaomi (Mi Credit), among a host of dozen other companies, have plugged lending as a feature on their platform which is not only limited to individuals but is available for small and medium enterprises as well. For almost all digital payment startups, local as well as global companies operating in India, lending is an obvious go-to service to provide to their users as there is hardly any money to be earned in facilitating digital payments.
The recent entrant to this is Amazon India that announced zero interest credit offering called Amazon Pay Later, limited to people shopping or paying bills on Amazon.in. Amazon has partnered with digital lending startup Capital Float and a local bank Karur Vysya Bank to facilitate lending. The credit offering by Amazon India is a popular “buy now, pay later” kind of lending product which lets users buy or pay for a service without having the need of a credit card. Other companies including Flipkart, Xiaomi’s MiPay, Ola Money, and a few others also provide this credit facility to their users.
As WhatsApp Pay and Amazon India have also jumped into the fray with their respective lending offerings it would be interesting to see how other players react to this. Compared to other players in this segment, companies such as WhatsApp, Amazon, PhonePe, and Paytm are at an advantageous place due to their deep pockets as well as huge user base. Although, companies like Ola and Xiaomi are well known and have a strong user base they are not known for their fintech solutions.
As more and more companies launch credit products in India, one clear winner would be the companies who have got an NBFC (non-banking financial companies) licence from the Reserve Bank of India, as it’s compulsory for a company to either have an NBFC licence themselves or partner with someone with a license to offer a credit facility.