What WhatsApp’s payments push means for Paytm
BENGALURU: The entry of WhatsApp into digital payments is set to significantly expand the digital payments market in India and could threaten the dominance of Paytm, highlighting the challenges that pure consumer payments firms face in defending their turf.
The payments launch by WhatsApp, one of the most popular internet platforms in the country, is likely to introduce tens of millions of users to digital payments, industry executives said.
Paytm, the runaway leader in payments with nearly 300 million registered users, stands to lose most if Facebook Inc.-owned WhatsApp can push its payments service to the 230 million people who use its app frequently to send messages, pictures and other content. (While Paytm claims roughly 300 million registered users, the number of people using WhatsApp on a regular basis is far higher.)
Based on the UPI (Unified Payments Interface) platform, WhatsApp launched payments on trial for some of its users this month. It is expected to introduce the service to its entire user base soon.
On Thursday, Paytm founder Vijay Shekhar Sharma alleged that WhatsApp was flouting rules and putting consumers at risk because it was skipping steps in the payments process. Sharma also alleged that WhatsApp was restricting access to other UPI-based platforms. In response, the National Payments Corp. of India (NPCI), which owns UPI, said all UPI apps have to allow interoperability.
Beyond the issue of interoperability, what is at stake is Paytm’s dominance of the digital payments business that has helped catapult the company into India’s second-most valuable internet start-up after Flipkart.
Driven by a massive spending spree and Sharma’s ambitious vision, Paytm beat rivals including Freecharge and Mobikwik to emerge as the country’s largest digital payments brand. Paytm has been the country’s most stunning start-up story in recent years. The company has enriched many of its investors and employees and become a household name. It raised more than $2 billion and counts China’s Alibaba Group and Japan’s SoftBank Group as two of its key investors. From a valuation of less than $200 million at the end of 2014, its valuation soared to $10.2 billion this month.
That valuation is based mostly on expectations that Paytm will continue to dominate payments, expand its fledgling payments bank business and introduce new services such as wealth management.
Now, WhatsApp, with its easy-to-use interface and spending power, will offer the biggest challenge to Paytm yet.