WhatsApp Pay is about to begin a number of pilots in India in partnership with financial institutions to see what products and services gain traction, says Abhijit Bose, the company’s country head.
The COVID-19 pandemic has made clear the need for people to access financial services remotely. “We want to give partners access to services and test new solutions,” Bose said, speaking at the Global Fintech Fest on July 22. “We are not designing solutions in isolation but in partnership with others.”
The starting point for the Facebook-owned messaging app is India’s United Payments Initiative, which allows people to transfer money instantly among others or with merchants via a mobile, using biometric recognition instead of entering personal information.
“This isn’t just for urban areas,” Bose said. “COVID has shown us the need to scale economic activity for people and small businesses now.”
WhatsApp has 400 million users in India, making the country its biggest market out of its 2 billion users worldwide. However, regulators have so far refused to give it a payments license.
Helping banks scale
WhatsApp so far has been building features with Indian commercial banks to supplement their branch networks with a virtual version.
Its first relationship was announced in March 2019 with Kotak Mahindra Bank, allowing customers to use the messaging app to check balances, use a Kotak chatbot, and other services. This spring others such as HDFC and ICICI Bank did the same.
These partnerships are growing deeper. On July 24, Yes Bank announced the fullest spectrum yet: customers can now use WhatsApp to open accounts, check balances, redeem rewards points, search for nearby ATMs, and apply for products and services, including loans and investments.
Banks, of course, have their own banking apps. How exactly they’ll integrate these with WhatsApp therefore remains an experiment. “How can banks use our reach, our security and our simplicity, to complement what they’re already doing, and optimize for a few services?” Bose asked.
Some of those might include micro pensions investing, credit, and insurance. For banks, it is too costly to reach people outside the big cities and towns; many people and small businesses can’t escape the cycle of poverty without the ability to begin saving and investing. This isn’t new, but COVID-19, creating both a health and an employment crisis in India, has made the reality stark.
What we need to bring to the masses are services, not paymentsAbhijit Bose, WhatsApp Pay
“Over the next 18 months we will conduct multiple pilots to solve distribution problems, with financial partners and technology partners,” Bose said. Each test will start small, and WhatsApp Pay and its partners will invest together in any that show promise.
Bose said India’s digital infrastructure, such as UPI, make it possible to attempt a commercial model for mass financial inclusion, but WhatsApp Pay is not looking to simply be a payments rail. “Payments on its own doesn’t help a business increase sales, or put more money in the hands of migrant workers,” he said. “What we need to bring to the masses are services, not payments.”
These will not be services of WhatsApp, however: they will be those of its bank partners and the fintechs they work with. WhatsApp is more of an investor-slash-orchestrator. “We use the venture model,” Bose said, “of taking controlled risks and scaling up those that deliver results. We don’t know what will work, or what won’t work. The key is to take a few punts and see if we can discover some breakthroughs.”
Bose did not mention Facebook’s ambitions for its Libra stablecoin and whether it would play a role on WhatsApp in India.