After facing regulatory hurdles and courtroom battles for months, WhatsApp Pay has been given the nod to go live on the Unified Payments Interface (UPI) network in India with a maximum user base of 20 million in the first phase.

The approval from the National Payments Corporation of India, incidentally, comes on the same day as it sets a 30% cap on transaction volume for third-party apps using the UPI network, in a move likely made to allay fears of several regulatory authorities including the Reserve Bank of India over potential monopoly risks.

WhatsApp Pay will go live in a “graded manner” from its current registered user base of one million who were using the service in a beta mode. The payment app will use a multi-bank model with one of the payment service providers (PSP) banks being private lender ICICI Bank.

NPCI’s move comes just days after its popular UPI network has for the first time crossed the two billion transaction mark to firmly establish itself as the primary retail payment channel in the country. In October UPI processed 2.07 billion transactions worth Rs 3.86 lakh crore.

Market participants, including rival companies, expect the UPI volumes in India to zoom register newer records in the upcoming months aided both by the entry of WhatsApp Pay and a growing propensity among its massive consumer market towards digital payments.

“National Payments Corporation of India (NPCI) has given approval for WhatsApp to ‘Go Live’ on UPI in the multi-bank model,” NPCI said in a statement. “WhatsApp can expand its UPI user base in a graded manner starting with a maximum registered user base of twenty (20) million in UPI.”

As per latest undisclosed statistics on UPI, currently Walmart-owned PhonePe is the most used UPI app in the country having processed nearly 835 million transactions in October with a market share of close to 40%, according to sources with knowledge. Google Pay is a close second with about 820 million transactions.

Both these companies backed by US-giants in the past months have comfortably exceeded the 30% transaction share. These companies have been given time till 2023 to bring down its market share, NPCI said in a circular uploaded on its website on Thursday. The move was prompted keeping “to address the risks and protect the UPI ecosystem as it further scales up,” NPCI further said in a statement.

Meanwhile, WhatsApp Pay will have to comply with the 30% transaction volume from the onset as the regulation for apps currently with market share below the permitted limit have to ensure compliance from 2021.

Google Pay, Paytm and PhonePe didn’t comment till press time. An industry executive said that the entry of WhatsApp Pay would in the way of increased competition bring down transaction volumes of both PhonePe and Google.

The 30% transaction share will be calculated on a three-month rolling basis, and would be enforced by the regulated payment service provider banks such State Bank of India, HDFC Bank, Axis Bank among others on the backend.

ET was the first to report in September 2019, when NPCI first mulled over such a cap in a closed-door steering committee meeting.

The approval to WhatsApp pay comes after months of courtroom battle at the apex court, nod from both antitrust body Competition Commission of India and RBI following concerns around alleged unlawful bundling of services and non-compliance with data localization norms.

The popular social messenger app has over 400 million active users in India, and albeit strong brand recognition and existing user base is expected to emerge as one of the leading digital payments firms in India – a country where its parent company Facebook is harboring ambitions to emerge as a super-commerce app.





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