WhatsApp Money Lending Offering: Looking Beyond WhatsApp Pay?

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WhatsApp money lending offering could give many Indian startups run for their money.

It is often remarked that almost all giant tech companies aim to be in the fintech space someday. This holds ups very true for Whatsapp which is now reportedly looking to the space of lending money to their customers in India.

Whatsapp, after putting in place much-needed pre-requisites to roll out ‘WhatsApp Pay’ app across India, is also looking forward to offering credit or lending related services in the country.

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This was brought to light by the recent regulatory filings of WhatsApp in India which were sourced from Tofler. The Indian subsidiary of the Facebook-owned messaging platform happened to specifically list ‘credit’ under a revised MoA aka Memorandum of Association document.

To be specific, the modified document lists this as one of the company’s business objectives, “To advance money or give credit on such terms as may seem expedient, and with or without security, to customers and others”.

This is a rather quick and very interesting change in the company’s business objectives. According to WhatsApp’s internal discussions within the company, they had to recently agree to comply with India’s strict data regulation rules. It was very much mandatory for a full-scale rollout of Whatsapp Pay in India.

As of now, this peer-to-peer payment service of WhatsApp is still under the pilot mode with just 1 million users in India having access to it. The delay for a full-fledged rollout has been largely due to Whatsapp’s slow adoption of the Indian government’s data regulations for foreign firms.

After the recent Jio-Facebook deal, it is being expected that the public rollout of WhatsApp Pay will ramp up the acceleration of the money lending option of Whatsapp Money. Regulators, however, still haven’t received any new communication from WhatsApp’s Indian subsidiary. A person who is aware of this matter, under the condition of anonymity, has said that even though things should start moving faster, WhatsApp still hasn’t achieved a 100% data-localisation compliance.

It has been reported that the WhatsApp money lending offering wouldn’t be offered directly as the law prohibits them to undertake any banking business of their own. Therefore, the company is willing to explore partnerships with various banks.

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Besides, once the WhatsApp money lending offerings are rolled out in India it will have to face fierce competition from the existing competitors in this space such as Earlysalary, Zest, PayLater and more.

In the past two years, the lending and credit service offerings have garnered enough attention from almost all of India’s digital payments companies in India. This is because the app-based payment business model has almost been rendered as non-viable in the current scenario.

The app-based payments service is mostly all about UPI transactions. However, companies like PhonePe or Paytm are not allowed to charge users for transactions, be it peer-to-peer or P2P in nature. The charges can only be applied to merchant level transactions. But companies are arguing that such type of transactions only accounts for a minuscule share of the overall billion-plus monthly transactions, thus removing any scope for a possible increase in revenues.

It should also be noted that not only WhatsApp but their existing competitors in the Indian payments space such as Flipkart-backed PhonePe, Paytm and Google’s Google Pay are looking forward to diversifying as well. PhonePe, for instance, has already enabled on-point physical banking points for users to get cash in return for paying via UPI. However, as of now, they are not charging for any of these transactions. On the other hand, Paytm have also recently started offering merchant services with its ‘All in one’ QR codes.

Now, it remains to be seen what the future holds for WhatsApp Pay and rumoured WhatsApp Money lending service offering it plans to roll out in India soon. We will keep you posted on all future developments. Stay tuned.

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