The Indian digital payments market which has about 60 non-banking players including Paytm, MobiKwik, Amazon Pay and Flipkart (PhonePe), faced a new challenge last month when Facebook-owned messaging company WhatsApp launched its peer-to-peer digital payments beta service in India.
The Indian digital payments market which has about 60 non-banking players including Paytm, MobiKwik, Amazon Pay and Flipkart (PhonePe), faced a new challenge last month when Facebook-owned messaging company WhatsApp launched its peer-to-peer digital payments beta service in India. Paytm boss Vijay Shekhar Sharma also took to Twitter and lashed out at Facebook for allegedly killing the UPI system in India. “After failing to win war against India’s open internet with cheap tricks of free basics, Facebook is again in play. Killing beautiful open UPI system with its custom close garden implementation. I am surprised, champions of open @India_Stack, let it happen!” Sharma had written in the tweet.
Prarthna Tiga, Senior Technology Analyst at GlobalData believes that WhatsApp’s entry in India which has 200 monthly active users is expected to disrupt the unified payments interface (UPI)-based digital payments landscape in India, currently dominated by Paytm.
“E-payments in India are already witnessing unprecedented growth since the government’s announcement of demonetisation in late 2016. Now with the foray of WhatsApp, the country’s smaller and struggling e-payments companies fear a unique threat in an already crowded and competitive ecosystem,” she said.
The digital payments segment in India witnessed a boom post demonetisation in 2016. The competition intensified with the entry of Google Tez in September 2016. Reportedly, Facebook is also in talks with lenders like State Bank of India, ICICI Bank, Axis Bank and HDFC Bank, to integrate the UPI-based payments solution.
GlobalData, however, pointed out that even as the e-payments market in India is expected to grow in the coming years, most e-wallet operators in India are still not profitable. It stated that some of these players who were issued licenses by the Reserve Bank of India are still evaluating the situation before setting up operations.
“We expect consolidations to be the force in the next few years, with the bigger players focusing on opportunities to expand their footprint in India and other markets,” Tiga said. She added that smaller players in the meantime, are tapping into unidentified opportunities to stay relevant in the market.
“Therefore, creating a compelling case for people to use digital money is becoming absolutely necessary for smaller players, while bigger players are taking advantage of their wide user base,” she added.