NPCI approves additional 60 million UPI users for WhatsApp

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In what comes as a shot in the arm for Meta-owned WhatsApp, the National Payments Corporation of India (NPCI) has approved an additional 60 million users on UPI for WhatsApp. With this approval, WhatsApp will be able to expand the service to its 100 million users, intensifying competition in the digital payments space in India.

The move comes months after it approved increasing the user cap for WhatsApp's payment service from the current 20 million to 40 million.

While WhatsApp has been pushing for an increase in user cap, NPCI wanted to increase this in a phased manner so that the payment system is not overwhelmed.

NPCI, which operates the country’s retail payment and settlement systems, had allowed WhatsApp to start payment services in November 2020 with a cap of 20 million users. The Meta-owned company was expected to disrupt the payments space with its large user base in India, but it had not taken off in a big way.

Now, WhatsApp has decided to ramp up efforts to expand the payment service and wants more users.

WhatsApp’s messenger service has over 400 million users in India and lifting the limit for the payment service in one go may lead to extremely high transaction volumes on NPCI’s platform.

NPCI is considering increasing the cap in a phased manner because it cannot handle the huge volumes that might come with removing the cap completely

Since September last year, WhatsApp has been doubling down on expanding its payment service in India.

WhatsApp India’s director of payments Manesh Mahatme said that it is scaling up the service in phases in partnership with NPCI. Mahatme said the focus will be on accelerating marketing initiatives to increase awareness of the payments feature on the instant messaging app.

As part of this drive, the company made the payment service more visible by featuring the rupee icon in the chat composer, between the attachment and the camera icons. It allowed the camera icon on the WhatsApp home screen to be used to scan QR codes and make payments across 20 million stores in India.

Its renewed efforts to boost its payment play seem to be paying off as transactions on its platform have seen a steady uptick.

However, WhatsApp’s share in India’s monthly payments remains minuscule compared to PhonePe and Google Pay.

Separately, NPCI capped the volume of United Payment Interface-based transactions for third-party payment apps such as Phone Pe, Google Pay and WhatsApp to 30 percent of the total volume of transactions processed in the preceding three months on a rolling basis. Operators are required to comply with this norm by January 2023.

The Unified Payments Interface (UPI) recently breached the $1-trillion mark in transaction values for the financial year 2021-22, a major milestone for the payments system which has witnessed substantial growth over the past two years and led to further digital adoption for payments and financial services.