WhatsApp has more than 200 million users in India for it's instant messaging service.
With more than 200 million users in India, WhatsApp is releasing a new mobile payment service.
Launching in late March 2018, WhatsApp UPI is currently being rolled out to some Indian users to test its beta version of the app on iOS and Android.
WhatsApp move into the market has worried established companies such as Paytm who are India’s largest mobile payment company.
Paytm, which is part-owned by Japan’s Softbank and Chinese e-commerce company Alibaba has about 300 million registered users in the country.
Vijay Shekhar Sharma, Founder of Paytm has accused the Facebook-owned company of bypassing crucial payment norms guaranteeing customer security.
Vijay told The Hindu: “We are just seeking equal treatment. WhatsApp payment does not ask for a log-in password, which is a huge security risk for consumers.
“While it [WhatsApp’s payment] is in beta testing, we don’t think there will be any changes added later.”
It also highlighted that WhatsApp was attempting to repeat their parent company’s internet service app ‘Free Basics’.
Offering a free, but limited service, Free Basics was widely criticised for giving access to a small number of websites.
India’s telecoms regulator (Telecom Regulatory Authority of India) banned the app on grounds of violating the country’s net neutrality rules.
Vijay added: “After failing to win the war against India’s open internet with cheap tricks of free basics, Facebook is again in play. Killing the beautiful open UPI system with its custom closed garden implementation.”
How does WhatsApp UPI work? It uses India’s instant real-time payment system Unified Payment Interface that allows funds to be transferred directly from the sender’s bank account to the recipient’s account.
However, users will have to link their bank account with the app in order to access its mobile payment service.
To enable the app, the user will need to access their friend’s WhatsApp profile before pressing the attachment button.
An error message will come up on the screen, saying that the user’s friend will not have WhatsApp’s UPI feature but the user would have enabled the payment system.
Go back to settings and the payment option will be available where there is the possibility of inviting other friends into WhatsApp UPI.
One of the challenges WhatsApp will face is including services such as movies, travel and restaurants onto its app which Paytm already provides at the moment.
Other mobile payment companies welcomed WhatsApp entry into the Indian mobile payment market on Twitter despite the comments made by Paytm’s Sharma.
Kunal Shah, former Chief Executive of Freecharge tweeted: “All companies threatened by WhatsApp payments are going to tag it as anti-national and try to pull it down as it’s hard to win on merit against network effects of WhatsApp.”
Paytm have said they are ready for the competition from WhatsApp albeit they are worried about what happened when Alipay was launched in 2009.
The Alibaba-owned company almost monopolised the Indian market. However, its market share dropped from 80% to 53% when Tencent merged its chat app with a payment gateway.
With WhatsApp’s UPI launch coming closer, sending and receiving rupees through an instant message could become the norm for 1.3 billion Indians.