WhatsApp’s is making it easier for consumers in India to initiate digital payments within its interface in a move that should help boost the volume and value of mobile transactions in the country and set a precedent for the rollout of the same function in other geographies.
The Facebook-owned messaging company will add the rupee symbol to its chat box to remind users they can make payments on the platform, a change from the current arrangement that takes two steps to initiate payments.[i] WhatsApp will also allow its camera app to recognise all the popular QR codes and make scanning accessible from the camera icon in the WhatsApp chat composer.
WhatsApp first allowed users to add friend or family contact information, start a conversation and add someone to a group by scanning a QR code last month. They are now extending the capability to enable contactless payments from their Apple iOS and Android apps.
The company’s share of UPI payments is comparatively low in India, where PhonePe and Google Pay account for an estimated 80% of all transactions between them. That could change after the National Payments Corporation of India (NCPI) announced new rules limiting any one provider’s share of UPI transactions to 30% as of January this year. However, companies have until December 2023 to comply.[ii]
Smaller digital payment providers now sense an opportunity, with WhatsApp hoping to gain at PhonePe and Google Play’s expense by making it easier for its users to initiate payments with fewer clicks from within its interface. The WhatsApp payments feature is powered by BHIM UPI and processed by Indian payment partners, including SBI, Axis Bank, HDFC Bank and ICICI Bank.
Interoperable QR codes to drive further mobile payment transaction growth
WhatsApp’s move should also help drive more significant volumes of QR code payments in India, already one of the world’s most prominent adopters of the technology. The country has embraced QR codes due to the low entry costs and the many small merchants. The NPCI estimates that a typical point-of-sale (POS) terminal costs around Rs 12,000 (US$ 160) while a mobile equivalent costs around Rs 5,000 (US$66). By contrast, all a merchant needs to start accepting QR code-based payments is a bank account, a smartphone and an Internet connection, most of which they already have.
Some reports estimate 40m merchants in India, 20m of which can use QR codes. Government impetus has done much to drive that expansion following India’s demonetisation in 2016, with authorities heavily influenced by China, where QR codes played a crucial role in the growth of its mobile payment service ecosystem. With the fair wind of favourable regulatory conditions behind them, Indian providers quickly developed and launched QR payment systems, starting with Paytm and followed promptly by PhonePe, Mobikwik, Razorpay and Freecharge, amongst others.
The Royal Bank of India (RBI) will shortly introduce new rules designed to make it even easier for consumers and merchants to facilitate payments using QR codes[iii]. Within six months, payment system operators will no longer be able to use proprietary QR codes, which demand both buyers and sellers have the same QR code app on their smartphones. Instead, they will have to offer interoperable QR codes which multiple, different apps can read with two examples Bharat QR and UPI QR, already certified to comply. Other proprietary QR codes are under instruction to be phased out by March 2022, while any new ones introduced need to demonstrate the same level of interoperability.
Global QR code growth
QR codes have been popular in India and China for some time, but analysts predict their adoption will soon accelerate in other parts of the world. GSMA Intelligence estimates that QR Codes became the second-most offered channel in 2020 globally, boosted by a pandemic-induced preference for contactless payments. It is second only to the unstructured supplementary service data (USSD) mechanisms favoured by emerging economies in Southeast Asia and Africa.
In its latest report – QR Code Payments: Key Opportunities, Regional Analysis & Market Forecasts 2021-2025 – Juniper Research predicts the value of QR Code payments will reach US$2.7tn by 2025, driven by low acceptance costs. Much of the growth is expected to come from retailers in emerging markets that lack the necessary credit/debit card systems, whilst those in developing economies will use them to supplement existing contactless payment card provisions.
Exact numbers are always difficult to forecast, but there is little doubt that there is now sufficient momentum behind QR codes to drive greater use of smartphone-based mobile payments across the globe.
[i] WhatsApp Adds India’s Rupee ‘₹’ Symbol To Chat Box For Faster Digital Payments, NDTV, 1st October 2021
[ii] NPCI to alert UPI entities near 30% cap, may give exemptions, LiveMint, 26th March 2021
[iii] Paying with your mobile wallet to get simpler with interoperable QR codes, MoneyControl, 28th October 2020