WhatsApp to enter world of mobile money – first stop, India

Sending money

WhatsApp has been granted permission to test out a money transfer service in the Indian market, a move which could generate notable ripples in the maturing mobile money segment.

While there are several mobile money services available currently, penetration has been limited. There is noticeable momentum for the idea of a virtual wallet, though a brand such as WhatsApp entering the market could certainly provide a boost in credibility and trust, thrusting adoption upwards.

The National Payments Corporation of India (NPCI) has given its consent to roll out a WhatsApp beta launch in India to test out the money transfer service. Four institutions will join the multi-bank Unified Payments Interface (BHIM UPI) UPI model, which will be announced at a later date, and a full feature product shall be released after the beta test. For the moment WhatsApp will be limited to a user base of 1 million during the test, while only small transactions will be permitted.

This is a very logical step for WhatsApp to take, and does pose a considerable threat to anyone who is currently offering mobile money solutions to its customers. Samsung and Apple are two companies who do offer such services, but only to those who have Samsung or Apple devices. A WhatsApp solution would be applicable to everyone who has a WhatsApp account making the potential pool considerable larger.

The move would also counter any security concerns which some might have. WhatsApp is widely recognised as one of the most secure messaging platforms worldwide, so much so governments are attempting to introduce legislation forcing the firm to weaken its encryption algorithms or introduce backdoors. The introduction of such legislation indicates the spooks can’t hack their way through the WhatsApp security which is a thumbs up for the software’s performance and resilience.

A seemingly unhackable messaging app offering money transfer solutions would certainly be of interest to some. It also builds on a use of the messaging app which is already out there. For those organizing group holidays or larger social occasions, WhatsApp has been used for logistics but also to pass on bank account details to those in the group. Adding a payment feature in the app is simply removing a step in this payment chain.

100% secure is of course impossible, but if you listen to the right people, WhatsApp is as close as you can get for a mass market product. A money transfer service certainly addresses a need of its users and provides reassurance for the security conscious who are currently resisting the mobile money revolution. Should the beta be successful in India, this could prove to be quite a disruption and enabler of growth for mobile money worldwide.

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