State Bank of India (SBI), one of the four large Indian banks with which Facebook-owned WhatsApp, has been working to launch a full-fledged payments service, will join the platform by August, according to sources. Earlier this week, Bloomberg had reported that the messaging app may launch its payments service next week with its other partners — HDFC Bank, ICICI Bank and Axis Bank — without waiting for SBI to come on board. FE was unable to independently verify the timeline of the launch of WhatsApp’s payments feature. What is delaying the tie-up between SBI and WhatsApp are contractual nitty-gritties, such as questions of dispute resolution and redressal mechanisms in instances of payment failure. Firming up such terms may take another six to eight weeks, a source said.
In addition, the country’s largest lender is also waiting for clarity on WhatsApp’s stance on the Reserve Bank of India (RBI) requirement for all payment players in India to store data exclusively within the country by October this year.
According to a senior banker, WhatsApp is unlikely to go ahead with its launch without on-boarding SBI. “The target users of WhatsApp payments will not be the same as those using internet banking or other sophisticated channels. These are people who just have a smartphone. How can they launch without SBI when 70% of that user base is with SBI?” he said.
In February, WhatsApp had enabled UPI-based payments for a section of Indian users in partnership with ICICI Bank. The National Payments Corporation of India (NPCI) later came out with a circular requiring all players offering UPI payments to put in place certain interoperability features by April 16, 2018.
Earlier this month, NPCI managing director and CEO Dilip Asbe told FE that most UPI apps are now compliant with that circular. Payments players like Google Tez and Paytm are understood to have cornered a fair chunk of the Unified Payments Interface (UPI) market in the last nine months and WhatsApp may be fearful of losing out to them.
According to a February report by Credit Suisse, transaction volumes on Tez are already at par with non-cash transactions recorded by Axis Bank, which is the fourth-largest bank in terms of digital transactions. The same report observed that the entry of WhatsApp into the UPI ecosystem would lead to a major shake-up. “WhatsApp, with 230 million daily average users, is by far the most popular app in India and as it soon plans to integrate a payments button, digital payments are set to explode and we estimate a $1 trillion market over the next five years,” it said.