In early February 2018, the popular messaging app WhatsApp launched a WhatsApp Payments feature in the beta version for one million users. This came quickly on the heels of the launch of Tez, a digital payment app by Google. Both of these features aim to permanently change the way people conduct payments in India and are the biggest payment trends of 2018. However, they face two challenges: existing digital payment apps and a population that still largely uses cash for transactions. Here’s how WhatsApp Payments and Tez could potentially change the way Indian conduct transactions.

Will They Challenge Existing Wallets?

While both Tez and WhatsApp Payments are direct competitors because they were introduced around the same time, they also need to compete with existing digital payments giants that have already established themselves. After demonetisation, these digital wallets got a huge boost by the government and witnessed a rapid increase in the number of users. These apps have made a name for themselves, but there are certain key areas where WhatsApp Payments and Tez might have a distinct edge.

  1. Large existing user base

 When new apps are first introduced, the biggest challenge for them is to get users to download, register and use the app. Doing this can be both, challenging and expensive. It requires huge investments in running awareness campaigns and offering incentives to motivate people to use the app. This is where WhatsApp Payments has the biggest edge. WhatsApp currently has over 225 million users in India. In comparison, the next biggest digital wallet app in India only has about 80 million active users. Tez is also quickly picking up, with around 18 million active users as of February 2018. WhatsApp Payments offers users greater convenience because they do not have to download any extra app. The Payments feature will be listed in this Attachments menu. All users need to do is select this option to transfer money to one of their contacts.

  1. Familiarity with the apps

 WhatsApp has transcended social, gender and age barriers, to become one of the most popular apps in India. The large number of people already using this app on an almost daily basis means that they are already comfortable navigating around it. New apps need to find ways to help users understand their app and have to give them time to be comfortable using it. WhatsApp, however, has the advantage of already having a dedicated user base. These users, across a number of demographics, are very confident about using the app and will find it easier to adapt to the Payments feature. Even people who do not have a lot of exposure to technology will feel comfortable using WhatsApp Payments because they already use WhatsApp very frequently. The familiarity users have with the app is one of the greatest advantages of social media payments.

  1. UPI-Enabled wallets

 Both Tez and WhatsApp Payments operate through United Payments Interface (UPI) a system introduced by the National Payments Corporations Corporation of India. This allows users to connect their bank account with the payments app so they can transfer and receive payments directly to their bank accounts. Most other digital wallets in India do not operate through UPI. Instead, they require users to add money from their accounts to the app in order to transfer money to other accounts. When a user receives money from another account, it goes to their digital wallet, not their bank account. Tez and WhatsApp Payments might attract more users because of the greater convenience they offer. After the one-time process of verifying their bank account details, users can send money to their contacts with no restraints. Tez also allows users to pay utility bills and merchants through the app. Unlike digital wallets, users do not have to keep adding money to their accounts.

  1. Reliable brand names

New apps usually have to work hard to earn user’s trust and establish a credible brand image. This is a time-consuming process and requires large investments. Google and Facebook-owned WhatsApp are already tech giants and are very well-known by every user. This is why users will be more inclined to using these apps. Additionally, since these corporations are home to some of the best engineers in the world, they might provide more advanced features greater security in digital payments for their users.

Will These Apps Impact Digitization in Smaller Cities?

One of the biggest avenues for digital payment apps to expand their user base is in the smaller cities and towns of India. Consumers who live in these places might not adapt quickly to new technology. However, they already use WhatsApp extensively to keep in touch with family and friends. This might make them more confident about conducting digital transactions through it because they already know the app very well. Migrant labourers who need to send money back to their families at home might also be more comfortable using WhatsApp Payments because of the familiarity and convenience it offers.

The introduction of WhatsApp Payments and Tez will add considerable value to the already-competitive digital payments space in India. With greater convenience and features, will it get sweeter for digital payments in India?















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