WhatsApp sees six-fold jump in UPI transactions in June driven by newly introduced cashbacks

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WhatsApp has seen a 6x jump in Unified Payment Interface (UPI) transactions in June after it started offering cashbacks to customers in the month for making payments through its app.

The number of transactions increased to 23.04 million in June, as compared to 3.48 million in May, according to data released by the National Payments Corporation of India (NPCI). The values of transactions in June stood at Rs 429 crore, as compared to Rs 295 crore in May, a jump of 45 percent.

Considering the jump in transaction values is not in line with the number of transactions, most of these transactions are likely to be low-value.

However, the Meta-owned company still has a minuscule share in overall UPI payments and makes up only 0.39 percent of transactions in the month. That said, the share has improved from 0.05 percent in May and signals that cashbacks are helping increase transactions on the platform.

The company is currently offering Rs 35 per transaction in cashback for three transactions, for a transfer of a minimum of Re 1.

The National Payments Corporation of India (NPCI) approved an additional 60 million users on UPI for WhatsApp in April 2022. With this approval, WhatsApp was able to expand the service to its 100 million users, intensifying competition in the digital payments space in India.

However, UPI is dominated by two to three players enjoying a majority share of transactions -- PhonePe, Google Pay and Paytm Payments Bank. In June, PhonePe's share in overall transactions at 46.60 percent.

Google Pay and Paytm Payments Bank's shares stood at 34.50 percent and 15 percent respectively.

For the month of June, overall UPI transactions stood at 5862.75 million, amounting to Rs 10.14 lakh crore. The numbers saw a slight dip as compared to the month of May.

While WhatsApp is aggressively looking to grow its payments bet in the country, using cashbacks as a means to onboard customers is a highly debated move in fintech, although used by most players.

Industry executives and experts believe that customers lured through cashbacks and rewards may not stick once these are rolled back after a certain point. Only the effectiveness of the offering and products ensure that customers continue using these platforms.

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. Hence, 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.