An illustration photo shows Whatsapp App logos on a mobile phone in Sao Paulo, Brazil, December 16, 2015. A Brazilian court on Wednesday ordered telecommunications providers to block all access to the WhatsApp phone-messaging application for 48 hours throughout Brazil, Latin America's largest country, the court said in a statement. REUTERS/Nacho Doce/File Photo - RTX2D4HO
Facebook-owned messaging application WhatsApp is in discussion with banks to facilitate instant payments via Unified Payment Interface (UPI) for users within its platform.
WhatsApp is believed to have kick-started discussions with State Bank of India (SBI), the National Payments Corporation of India (NCPI) and a few other financial institutions for the same.
“Due to the complexity of the architecture, WhatsApp is in discussions with the State Bank of India, NPCI and few other banks to devise ways to integrate their systems with the bank and with NPCI,” a senior SBI official said on condition of anonymity reported The Economic Times.
UPI, launched by Reserve Bank of India Governor Raghuram Rajan in 2016, facilitates instant fund transfer between two bank accounts on the mobile platform.
“We are currently at the ‘proof of concept’ stage, looking at ways to integrate it with our back-end,” the SBI official added.
To allow UPI on WhatsApp all banks need to integrate their systems with the messaging app so that the app can identify the correct recipient and UPI layer allow the fund transfer between two parties.
“A messenger works in a manner of identifying an address box where the messages travel to instantly. Similarly, UPI instantly settles funds between one account holder and the other,” said a senior executive, who manages payments at a private sector bank told The Economic Times.
Similar method have been adopted by other applications like Truecaller and Hike Messenger who have UPI-based payments tie-up with ICICI Bank and Yes Banks, respectively.
However, such tie-ups require a wallet licence from the RBI.
According to The Economic Times, since messaging applications can allow instant and easy transfer of funds, banks are concerned over security of data in the process involved.
“Some security protocols will need to be implemented around payments through WhatsApp. If it decides to use Aadhaar, then we will have to enable biometric authentication,” another executive told The Economic Times
The current discussions also include concerns regarding the manner in which consumers will be able to access the payment method. That is, whether it will be done through WhatsApp or appear as a payment mode in the payment gateway page.
UPI plays an important role in India's drive towards digital payment. After demonetisation, UPI clocked 17.8 million transactions amounting to about Rs 7,000 crore in 2016-17, reported The Economic Times
Providing UPI on WhatsApp, which has 200 million users, is viewed upon as a huge potential for enterprise solutions as well.
“There is a certain amount of trust and familiarity factor associated with WhatsApp, with so many people using it. Hence it has a huge potential,” Bhavik Hathi, managing director, Alvarez and Marsal Transaction Advisory Group, a Mumbai-based consultant told The Economic Times.
“It will also allow instant payments for businesses working through social media like Facebook,” Hathi added.