WhatsApp has initiated talks with the State Bank of India, the National Payments Corporation of India (NPCI) and a number of other financial institutions to integrate payments on its platform.
This news comes two days after The Drum reported Hike beats Whatsapp to integrating wallet payments to push Digital India initiative. Also, how Digital Payments, AI and VR will power the Indian economy in future .
WhatsApp is in talks to allow its users to make payments via United Payments Interface (UPI), which facilitates instant fund transfer between two bank accounts on a mobile platform.
“Due to the complexity of the architecture, WhatsApp is in discussions with the State Bank of India, NPCI and few other banks to devise ways to integrate their systems with the bank and with NPCI,” a senior SBI official told the Economic Times.
“We are currently at the ‘proof of concept’ stage, looking at ways to integrate it with our back-end.”
UPI is run by NPCI and was launched by Reserve Bank of India Governor Raghuram Rajan in 2016.
India's digital payments market is booming post demonetisation, with the industry forecast to grow $500 billion by 2020, and will contribute 15% of GDP, according to a study by Google-Boston Consulting Group (BCG).
If successful, WhatsApp's initiative will also foster India's digital minister Ravi Shankar Prasad's claim of the Indian government estimating the digital economy to surpass $1.115tn by 2024-25.
WhatsApp will enable banks to integrate their systems with the messaging platform in order to identify the correct recipients, and UPI will allow instant settlement of funds between peers.
The system is similar to Truecaller, which worked with ICICI Bank to implement UPI-based payments, while Hike Messenger has started UPI-based payments in collaboration with Yes Bank using a wallet licence from the RBI.
WhatsApp will need to implement security protocols around payments, with some banking executives suggesting it may need to enable biometric authentication.
This year, UPI-based transactions jumped almost 20% to Rs 2,000 crore ($ 20 bn) in March, up from Rs 1,660 crore in January. WhatsApp, with its 200 million users can definitely help increase the numbers.