WhatsApp gets green signal from NPCI to launch its payment service via UPI in India

About NPCI 

The National Payments Corporation of India has given its approval to WhatsApp to ‘Go Live’ on UPI in a graded manner. The instant messaging platform has been testing the payment method for over two years but the expansion was stalled due to privacy concerns.

NPCI has given approval for WhatsApp to ‘Go Live’ on UPI in the multi-bank model after the data localisation requirements have been met.

WhatsApp can expand its UPI user base in a graded manner starting with a maximum registered user base of twenty (20) million in UPI.

The announcement was made immediately after NCPI said that with UPI reaching 2 billion transactions a month and with potential for future growth, it has issued a cap of 30% of total volume of transactions processed in UPI, applicable on all Third Party App Providers (TPAPs).

WhatsApp gets green signal to launch its payment service via UPI

  • This new cap will come into effect from 1 January, 2021. The organization claims that this move will help to address the risks and protect the UPI ecosystem as it further scales up.
  • The cap of 30% will be calculated basis the total volume of transactions processed in UPI during the preceding three months (on a rolling basis).
  • The existing TPAPs exceeding the specified cap, will have a period of two years from January 2021, to comply with the same in a phased manner.
  • Currently Google Pay and Phone Pe are two of the biggest players in the market with each commanding a market share of around 40%.
  • Messaging platform WhatsApp has finally got the nod from the National Payments Corporation of India (NPCI) for starting its payment service in the country.
  • NPCI has said that WhatsApp can expand its UPI user base in a graded manner beginning with a maximum of 20 million users.
  • Before making the announcement, NPCI made a big change in its Unified Payments Interface (UPI). The change puts a cap on single third parties such as WhatsApp, PhonePe and Google Pay which can now handle only 30% of overall UPI transaction volumes.
  • The Facebook-owned messaging application has been operating it UPI-based payment system called WhatsApp Pay in Beta since the year 2018.
  • However, due to the regulatory hurdles the app’s pilot project has been operational with only a small number of users.
  • Since demonetisation, digital payments have become very common in India. The most popular UPI based payment apps in the country are Paytm, PhonePe, GooglePay and AmazonPay.
  • Once WhatsPay Pay begins operating with more number of users, it can put up stiff competition for these apps owing to its large user base of more than 400 million. According to reports, digital payments markets in India is expected to grow to $1 trillion by 2023.
  • India is World’s largest market for WhatsApp and its parent company Facebook is looking to expand its user base further by introducing new features.
  • Earlier this year, Facebook bought a 9.99 per cent stake in Jio Platforms owned by Mukesh Ambani.
  • Experts were of the opinion that the company’s partnership was aimed at understanding India’s regulatory environment better.
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