Facebook’s WhatsApp to Expand Indian Payments Service After NPCI Approval

WhatsApp has won a green light to expand its payments service in India after a two-year pilot program by the Facebook-owned service.

National Payments Corporation of India (NPCI), which operates the country’s popular UPI (Unified Payments Interface) system, said in a Thursday (Nov. 5) press release it is giving permission for WhatsApp to expand its payments services in a “graded manner.”

The decision marks a milestone for WhatsApp, which first rolled out a test run of its new Indian payments service in 2018, with an initial user base of 1 million.

WhatsApp will now be able to sign up to 20 million users for its payments service, though it is also required to work with a number of banks.

Still, NPCI’s announcement comes as the organization, which is owned by a consortium of top Indian banks, also moves to cap the amount of UPI transactions any single payments app like WhatsApp can handle.

Starting Jan. 1, no single payment app will be allowed to handle any more than 30 percent of all UPI transactions in a month, with NPCI noting the cap will “address the risks and protect the UPI ecosystem as it further scales up.”

However, Facebook and WhatsApp face competition in the payments sector for the allegiance of tech-savvy Indian consumers from other American corporate giants.

Google and Walmart are currently the biggest players in the Indian mobile payments market, handling 80 percent of UPI transactions, according to TechCrunch.

WhatsApp has also faced heighted regulatory scrutiny in India due to Facebook’s ownership, with some questioning whether its ownership by the social media behemoth would give it an unfair advantage over rival payments apps, the news site said.

For its part, UPI has seen surging growth in India over the past few years and is now one of the most frequently used ways of making digital payments.

A major spur to that growth came in 2016, when the Indian government invalidated the vast majority of paper cash that had been circulating in the nation’s economy, the tech news site noted.