Digital payments are quickly overtaking e-commerce, food delivery, and travel to become the primary sector for investments and innovation.

Whether local or international, tech companies of all sizes are battling it out for leadership with their payment products – Flipkart with PhonePe, Google with Tez, Amazon and Alibaba-backed Paytm, and now most recently Facebook with Whatsapp Payments.

At the center of all this stands the NPCI. The National Payments Corporation of India owns and operates all retail payments including the Unified Payments Interface (UPI), an instantaneous payment system that helps you transfer money between two parties. UPI is a one of a kind system on top of which tech companies are building their own branded payment apps.

This recent launch of Whatsapp Payments is in continuation with big tech companies making a play for India’s growing preference for UPI.

With access to over 200 Mn Whatsapp users in India, this could be a potential game-changer for UPI adoption in India building on top of what Google Tez, BHIM, and PhonePe have accomplished. A number of banks support this new payments feature, including SBI, ICICI, HDFC and Axis Bank.

HowWhatsapp Payments work?

  1. Your Whatsapp and mobile number need to be the same one linked to your bank account. Since it’s a UPI based payment feature your bank should have UPI support as well.
  2. To enable Whatsapp payment you can either
  • Click on the attachments icon in any chat and then the “Payment” icon in the menu or
  • Open Whatsapp settings where you’ll see an option for “Payments” and click on it

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  1. A list of banks supporting UPI opens up. From the list provided choose the bank that you have a UPI linked account with already.

Incase you haven’t linked a bank account with UPI, Whatsapp offers an option to do so within the app. After selecting the bank, you would have to add details of your debit card and generate a fresh UPI PIN. You are now good to go and make your first payment.

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  1. For the transaction to happen, choose any one of your contacts to whom you want to transfer an amount, Click on the ‘Attachment’ option where you’ll see a send money icon. Enter the amount and your UPI pin to complete the payment.

Disclaimer: The IOS app only allows you to transfer money to another person with WhatsApp payments whereas the Android app allows you to transfer money to anyone with a UPI id.

Despite Whatsapp being effortlessly seamless and not to mention an extremely convenient P2P payment method, is it really what your business needs?

Whatsapp payments can give wallets, cash, and other UPI based apps major competition. Their entry into space primarily threatens digital wallet companies, as the instant messenger counts over 200 million users in India. Also, there is near to zero cost of customer acquisition for Whatsapp.

However, the P2P payment platform lacks the technical advances that allow a business to manage payments. A business needs more than just a payment platform to function. A business needs help with calculating total collections, managing refunds, and settlements.

A business needs redundancy and notification in case payments are not completed or have** failed. A business which needs to collect payments should have backup options to pay via Cards, Netbanking, Wallets, whatever else is needed in case their customers are not currently setup with a UPI account and don’t want to do so for now.

Providing such powerful payment acceptance and management solutions for businesses is something we do extremely well here at Razorpay.

To summarise, Whatsapp as a payment platform isn’t currently powerful enough to replace their payments provider but a great solution for sending Peer-to-Peer payments to someone you know or your friendly neighborhood store. More clarity on how Whatsapp Payments will integrate with Whatsapp for Business is needed to see how businesses can use this platform.

Razorpay, like always, will be on top of these developments and you can keep checking this space for frequent updates regarding Whatsapp Payments.