The much-publicised US-China rivalry is not just confined to trade. It is spilling over to other areas as well.
India’s digital payment space is fast emerging as a battlefield of sorts as US and Chinese companies lock horns to assert their supremacy.
California-headquartered Facebook’s WhatsApp is reportedly testing waters for its payment service WhatsApp Pay in India. Stakes are clearly high as it is up against the mighty opposition of Paytm, which is backed by China’s Alibaba.
What is worth noting is the start for the US company on the payment turf has been anything but smooth. It has already hit a regulatory wall even before the announcement of the launch date.
A petition filed before the Supreme Court alleged that WhatsApp does not comply with the government’s data localisation and protection norms. The Reserve Bank has already mandated that WhatsApp cannot store payments data outside India even at the trial stage, which the company has agreed to comply with.
That means WhatsApp Pay’s debut in India is going to be a costly affair. The company can launch its payments service after setting up its data centres in India, which will require fresh investments. Additionally, it will have to pass all regulatory tests, which may take a few months.
In India, Paytm still retains its first-mover advantage. It is by far the largest mobile payment company with around 33 percent market share and an estimated user base of more than 300 million.
Digital payments got a fillip after the government decided to ban high-value notes in November 2016. More or less every digital wallet company gained business during demonetisation, but it was Paytm that walked away with the cake, with the app catching the fancy of nearly every Indian with a smartphone to carry out small transactions.
The digital boom even got international players hooked to the India story. It was not long before biggies such as Google came out with its payment app Google Pay and Amazon with its wallet Amazon Pay.
Battle lines are clearly getting drawn. And WhatsApp Pay is staring at a formidable list of rivals including Google Pay, Amazon Pay and Walmart-Flipkart’s PhonePe. Also, sooner or later, Apple will bring its wallet Apple Pay to India.
Google is clearly playing a catch-up game. It launched its payments service Google Pay in India in September 2017. Things could have been way different had the search giant launched the service before the cash ban. Till March, it had around 45 million monthly active users, more than three times the 14 million a year ago.
Given the dominant position of Paytm, it’s only natural that WhatsApp Pay, when launched, will run into a Chinese roadblock.
The script for e-commerce companies such as Amazon and Walmart-Flipkart is a little different. Their payments wallets are used only by their own customers, mainly for cashbacks. Even wallets owned by telecom companies are used the same way.
What is working in favour of WhatsApp is its wide reach and acceptance. The social network firm already has some 300 million users in India where even political parties use the app as a key tool to reach out to voters, given its popularity in the country.
WhatsApp Pay would do well not to lose sight of the fate of mobile wallets firms. India had more than 60 mobile wallets by 2017- end, which is down to less than 50 as cash slowly made its way back into the system.
No doubt, WhatsApp is a late entrant. But it is coming to a market where mobile wallet transactions are projected to cross Rs 275 trillion by 2022, from Rs 1.54 billion in 2016, according to a study by Assocham-RNCOS.
Meanwhile, the government’s Unified Payments Instrument (UPI), which is used by mobile wallets and banks to facilitate digital transactions, is gradually making its presence felt. There were 781.79 million transactions through UPI amounting to Rs 1.42 trillion in April, up from Rs 1.33 trillion in March, data from the National Payments Corporation of India (NPCI) showed. Total value of transactions stood at Rs 27,022 crore alone in April 2018.
The field is wide open, but challenges are galore. Can WhatsApp crack the payments’ code in India?
Well, that’s a billion dollar question.
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