India's market conditions are ideal for WhatsApp's payments interface

Neha Dharia/Ovum
25 Apr 2017

WhatsApp is looking to capitalize on the growth of digital commerce in India with the introduction of a payments interface on its communications app, according to local media reports. A WhatsApp spokesperson has confirmed that the company has digital commerce ambitions in India. Meanwhile, local media reports that WhatsApp plans to enable payments using India's Unified Payments Interface (UPI). The UPI is regulated by the Reserve Bank of India and facilitates peer-to-peer (P2P) payments through bank accounts. This will be the first time WhatsApp has moved beyond its traditional focus on communications and into the payments and commerce domain. India is WhatsApp's largest market in terms of users, and the country is in the midst of a liquid cash scarcity due to the demonetization of certain currency notes by the government.

WhatsApp signals a move toward the platform model

With 1.2 billion monthly active users (MAUs), WhatsApp is the most popular chat app in the world. Its largest single market is India, where it has more than 200 million MAUs. WhatsApp is also one of the last few chat apps purely focused on communications: It has not yet made the transition to being a platform for services such as gaming, videos, music, and payments. WeChat, Line, and Facebook Messenger have all evolved into platforms for consumer services. With its plans to enable P2P payments via UPI in India, WhatsApp looks to be moving toward a platform model.

The introduction of digital payments will be an important step for WhatsApp. A digital payments gateway will enable WhatsApp users to carry out commerce activities on the platform. For example, small business owners could use WhatsApp to collect payments from customers, and friends could use it to share bills. In India, WhatsApp is used by small business owners to share updates and as an informal customer care platform. The implementation of payments will further strengthen the use of WhatsApp for business in India.

WhatsApp's timing for the introduction of a digital payments interface in India is critical because India is currently seeing a boom in digital payments since the government announced the demonetization of certain currency notes in November 2016, creating an extreme cash crunch in the market. Digital wallet Paytm added 5 million users within 15 days of the announcement of demonetization, and it grew from 122 million users in January 2016 to 177 million users in December 2016, while seeing its daily transactions grow to more than 7 million.

The Indian government has been promoting the use of digital payments and has even launched its own payments service to offer citizens more options to carry out transactions online and not rely on currency notes. WhatsApp has not made public its timeline for launching a digital payments service in India, but the company must act fast while market conditions are still favorable.

A digital payments solution is a critical component for any chat app with ambitions to become a platform because it allows consumers to buy and sell services or goods within the app. For WhatsApp, digital payments can open up avenues for monetization. And with a successful payments interface in India, WhatsApp can partake in the growth of digital commerce in an emerging, mobile-first market and create a model to replicate in other high-growth markets where it has a large presence (e.g. Brazil).

Facebook Messenger, with its chat bots and advanced platform offering, could be described as the developed market's chat app, but WhatsApp, with its simple, easy-to-use interface and strong brand in emerging markets, could become the messaging and monetization platform for high-growth markets like India.

Neha Dharia is an Ovum senior analyst specializing in OTT services with a focus on messaging, video and VoIP services. For information, visit

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