GK: WhatsApp Payments: Who will pay and who will gain? (ECONOMICS)

What is the Payments feature on WhatsApp? Who can get it?

WhatsApp has based its Payments feature on the Unified Payments Interface (UPI), which allows instant direct bank-to-bank transfers via a virtual payee address. Since Payments is still in the live beta-testing stage, not all users are seeing it reflected in their app. WhatsApp’s terms and conditions for using the feature say the user must be 18 years or older, but it is not clear how this will be verified.

So, is WhatsApp now processing monetary transactions?

No. WhatsApp is not a bank, and it cannot process financial transactions. The terms and conditions of using the feature say that WhatsApp is partnering with ICICI Bank. Once Payments is activated on a user’s WhatsApp, they can link their bank account to the app. A payment instruction can then be attached to a message, in the same way as users attach a file, a video or a photo. A UPI PIN and a bank account where UPI is supported, are needed for the transaction. Also, the receiver of the payment, too, must have the Payments feature enabled in their app. WhatsApp has said all payment transactions are final, and there is no option for refunds or chargebacks

What information will a user have to part with in order to activate Payments on WhatsApp?

After a user has accepted the terms and conditions, she is asked to choose from a list of banks, which includes most major UPI-based banks. She will have to enter her debit card information to sync the app with her account. Also, the WhatsApp account has to be linked to the same mobile number that is linked to the bank account. UPI on BHIM has a similar provision, since the mobile number is used as an identifier to locate the bank account. Each transaction on WhatsApp Payments has to be authorised by a four-digit UPI PIN, which is generated when a user activates the feature on her bank account. 

Is there a limit to how much you can transfer? And can you make payments to Groups?

WhatsApp says Payments is peer-to-peer based. WhatsApp has not specified an upper limit on transfers, but it appears that in beta-testing, only a limited amount can be sent. The exact ceiling should be revealed once the service goes live. WhatsApp Payments will work on Group chats; users will be able to pick an individual member in a WhatsApp Group to send money to.

And can WhatsApp Payments be used to pay a business?

It looks like businesses and merchant accounts are excluded as of now. However, given that WhatsApp now has a Business version of the app in India, it can be expected that these accounts will be allowed to accept payments in the future. But there is no announcement as yet.

What about issues of privacy? Will WhatsApp share users’ information with other companies?

WhatsApp says it “does NOT RETAIN” debit card details or the UPI PIN. However, it does look like it will share some information with third parties, including with its parent, Facebook. The privacy policy for WhatsApp Payments says that those who agree to the service are also agreeing to the company’s “data practices, including the collection, use, processing, and sharing of your information as described in our Privacy Policy and our Payments Privacy Policy, as well as the transfer and processing of your information to the United States and other countries globally where we have or use facilities, service providers, or partners, regardless of where you use Payments”.

WhatsApp will automatically collect information when a user sends or receives a payment, including the date and time, the sender and receiver’s VPA and name, and reference transaction number, according to the privacy policy. The app confirms it is working with third-party providers and services for Payments, and that these might give WhatsApp information about Payments transactions in certain circumstances. It adds that some of this information could be shared with Facebook.

Why are players like Paytm upset with WhatsApp Payments?

WhatsApp’s 200 million active user base in India could make Payments a gamechanger — and can potentially wreck other mobile wallets. People may switch entirely to the app for smaller, daily transactions. Once businesses are allowed to accept payments via WhatsApp, the feature’s use could be boosted further. WhatsApp currently does not allow UPI payments to those who are not on WhatsApp — whereas the NPCI’s rules for UPI state that interoperability is key to the system, i.e., a user with a UPI account should be able to transfer to another UPI address irrespective of platform (say, from Google Tez to BHIM). NPCI has, however, clarified that WhatsApp Payments is only in a beta test, and full launch will not be allowed unless all principles of the interface are fulfilled.