Recently, at the inaugural WhatsApp Business Summit, WhatsApp Pay was angled as more of a feature to enable WhatsApp business accounts to make payments, rather than as a FinTech looking to compete with the likes of PhonePe, Google Pay, etc.
Thus, with WhatsApp Pay seemingly waving the white flag and downsizing its ambitions, it’s interesting to explore why it might have fallen short.
After all, of the 659 million Indians who carry a smartphone, 81% are monthly active users (MAUs) of WhatsApp, making it by far the largest social messaging platform in the country.
It’s not just the large download base of WhatsApp that’s impressive, but also its high rate of engagement, with the typical user spending 45 minutes on it daily and sending 50 messages over that period on average.
Yet, Meta-backed WhatsApp Pay doesn’t command even a 1% market share in India’s Unified Payments Interface (UPI) landscape, languishing in 7th place by market share, behind the likes of Walmart-backed PhonePe, Alphabet Inc./Google-backed Google Pay, Paytm, CRED , Amazon’s Amazon Pay India, and FamPay.
So, despite having a captive customer base, why can’t WhatsApp convert its messaging users into payment users?
First and foremost is the regulatory tussle that Meta found itself in, when India put its foot down concerning data localisation, putting WhatsApp Pay in a fix and delaying its launch.
While UPI as a concept was rolled out all the way back in 2016, by the time WhatsApp Pay was finally permitted to launch and went live, it was already November 2020.
Not only did it miss out on early-mover advantage though, as the permission it received came with a ceiling of no more than 20 million users, which naturally hobbled its growth.
While that may appear to be game over right then and there, things did improve.
In 12 months’ time (November 2021) WhatsApp Pay hit the 20 million ceiling, with the regulator, National Payments Corporation Of India (NPCI), relaxing that limit to 40 million. A few more months later and it touched that mark in April 2022, with the NCPI now allowing it to aim for 100 million.
As such, clearly the NCPI’s capping, which had been flexible, was not the only cause behind WhatsApp Pay’s underperformance.
In fact, just a couple of months down the line, in June 2022, WhatsApp Pay saw explosive month-over-month growth in its transaction count, of 561%.
At face value, you might think that this would be the inflection point, whereafter WhatsApp Pay rises to become an arch rival to the likes of PhonePe and Google Pay, but no.
The very next month, in July 2022, its transaction count contracted back down by 74%.
Why these wild fluctuations?…
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This post was originally shared by Eashan Trehan on Linkedin.