The National Payments Corporation of India (NPCI) granted permission to WhatsApp to operate its digital payment platform – WhatsApp Pay, in a phased manner. The approval comes after WhatsApp agreed to adhere to the data localisation policy of Reserve Bank of India (RBI).
This is a significant development from multiple perspectives:
It will give a big boost to the Government’s vision towards a cashless economy
In spite of the demonetisation and the digital push by the government, cash is still the most dominant mode of transaction in India presently. One of the key limiting factors for digital payment has been the limited acceptance of digital payments. Currently, we have less than 100 million digital payment users in the country, which means more than 90 per cent of the population is not using it.
The unique advantage WhatsApp has in India is its 400 million+ user base that could significantly accelerate the adoption of digital payments in the country. Most of the digital payment adoption in the country is from urban areas. Hence, the popularity of WhatsApp in rural areas would also push the adoption of digital payments in rural India.
It will disrupt the current competitive ecosystem in Digital Payment industry
One of the key challenges faced by digital payment vendors was getting their app onto their consumer’s smartphones. It took Google Pay two to three years to reach a user base of around 70 million in the country. With its built-in user base, WhatsApp has a huge competitive edge over its peers, which will make this market highly competitive. In the next few years, we will see an increasing number of partnerships evolving in the digital payment ecosystem. We will also witness vendors aggressively pushing digital payments in rural sectors where current adoption is very low. We will also witness a lot of action and development in improving security and customer experience by vendors.
It will aid in the growth of data centres in the country
This is an early sign of how global majors are quickly embracing the data localisation policy in India. This will lead to an increase in data storage requirements in the country that will boost the growth of data centres and the adjacent technology industry in the country.