Select users in India are beginning to see payments functionality appear in Facebook-owned chat app WhatsApp as part of what looks like an extended beta test of the service, according to GizmoTimes.
The service, which appears in WhatsApp’s “attachments” menu alongside features like Documents, Gallery, and Video, is linked to India’s government-backed cross-bank Unified Payments Interface (UPI), which lets customers send and receive money via smartphone. For context, the service was rumored as early as last April, and was initially expected to launch in December.
The new feature debuts amid growing digital transaction popularity in India.
- After demonetization, digital payments surged. India removed 86% of cash from circulation in November 2016, leading millions of customers to scramble to find alternative payment methods. The UPI, for example, surged twentyfold in its first four months after launch, indicating high demand.
- That’s led finance and tech players to flock to the space as a means of capturing share early on in the market. Established Indian mobile wallet Paytm, which became the first Android app to count 100 million downloads, saw a 1,000% increase in money added to the wallet, and a 300% rise in app downloads in just the first three weeks after demonetization. It also grew transaction value 64% in the first year alone. Likewise, Google’s Tez service, which launched well after demonetization, added 7.5 million users in its first five weeks. That’s a good sign for players entering the market.
That’s especially true because, despite massive growth, digital money still has a long runway, and there’s plenty of the market still up for grabs. Despite demonetization, and the major gains in digital money that followed, cash is still a big factor in day-to-day life in India. Just 14% of adults make mobile payments weekly, and only 6% do so daily, according to The New York Times — figures that show just how much more growth is still to come.
And WhatsApp could be uniquely well positioned to succeed. WhatsApp has a massive, established addressable base for payments, since the service counts over 200 million active users in India. For context, that’s below Paytm’s 302 million registered accounts, but more than double its 90 million active users. The system isn’t perfect, since the bank-based UPI system requires an account — something 20% of Indian adults don’t have access to — and right now, it only enables P2P-type payments without an easy option for customers to pay businesses. But that wide audience could find the service exceedingly convenient, especially if WeChat’s payments performance in China is any indication. As a result, that could position WhatsApp near the top of the Indian digital payments ecosystem, and push the market further from cash.
In the US, the in-store mobile wallet space is becoming increasingly crowded. Most customers have an option provided by their smartphone vendor, like Apple, Android, or Samsung Pay. But those are often supplemented by a myriad of options from other players, ranging from tech firms like PayPal, to banks and card issuers, to major retailers and restaurants.
With that proliferation of options, one would expect to see a surge in adoption. But that’s not the case — though BI Intelligence projects that US in-store mobile payments volume will quintuple in the next five years, usage is consistently lagging below expectations, with estimates for 2019 falling far below what we expected just two years ago.
As such, despite promising factors driving gains, including the normalization of NFC technology and improved incentive programs to encourage adoption and engagement, it’s important for wallet providers and groups trying to break into the space to address the problems still holding mobile wallets back. These issues include customer satisfaction with current payment methods, limited repeat purchasing, and consumer confusion stemming from fragmentation. But several wallets, like Apple Pay, Starbucks’ app, and Samsung Pay, are outperforming their peers, and by delving into why, firms can begin to develop best practices and see better results.
- Sizes the US in-store mobile payments market and examines growth drivers.
- Analyzes headwinds that have suppressed adoption.
- Identifies three strategic changes providers can make to improve their results.
- Evaluates pockets of success in the market.
- Provides actionable insights that providers can implement to improve results.
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