WhatsApp Jumping into the Competitive Payments Market in India
If you are having difficulty keeping up with the payment app industry in Asia, you are not alone. Mercator Advisory Group has been watching this market and in particular Alipay and WeChat in China and Paytm in India. The market in India is about to get even more competitive as Facebook’s WhatsApp moves out of pilot phase and launches there with three of the major banks on board. Telecoms.com reported on WhatsApp’s product introduction:
WhatsApp first announced its intentions in the mobile money space back in February, trailing the feature with one million Indian users, though with more than 200 million users of the messenger app in the country there is certainly room to grow. According to Bloomberg, WhatsApp is readying the launch ahead of schedule, with only three partners instead of four, due to fears competitors are streaming too far ahead. HDFC Bank, ICICI Bank and Axis Bank are currently signed up, with the State Bank of India set to join as soon as the systems and processes are ready.
The potential for mobile and online payments in the country is massive. Aside from the rapid digital revolution which has been thrust on users following the democratization of data by Reliance Jio, the Indian Government is keen to take the country away from a cash-society. This focus on the digital world has certainly benefited certainly companies, some of which are less keen about sharing the profits around.
Having 200 million existing users will certainly help WhatsApp, but there are well funded, well known existing solutions in market already, namely Paytm and Google’s Tez, plus other apps waiting in the wings to enter the market in India:
Vijay Shekhar Sharma, founder of Paytm Payments Bank, one of the two dominant players in the Indian online payments space as it stands, has been highly critical. Sharma was one of the beneficiaries of the government’s drive towards digital, and has not welcomed competition in the space. His Twitter feed regularly criticizes the decision to grant WhatsApp a license, while also retweeting conspiracy theories about Facebook reading messages and stories questioning the security capabilities of the app.
The other dominant player currently in the market is Google Tez, though the WhatsApp team might be keeping a closer eye on WeChat. The Tencent-owned messenger and social media app has been making moves in the India space, and while it is yet to topple the dominance of Paytm, it arguably presents more of a threat. This is the reason Sharma is doing his best to limit the incursion of social media apps into the Indian payments market, he probably knows they will steal a lot of market share.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group