WhatsApp’s digital payments service goes live


THIS is some really great news. WhatsApp has simplified the payment system by incorporating UPI or Unified Payment Interface with its client for Indian users.

Now, sending and receiving money is as simple as sending a message on WhatsApp. However, you’ll first need to get this feature and set it up.

WhatsApp started rolling out this feature sometime last week using the beta app, though the chatter for this feature is quite old now. It will make way for more and more users on both Android as well as iOS in the coming days.

However, as with any new and exciting feature, WhatsApp has not made anything easy this time as well. Even if you get the latest version of this app, someone has to initiate the services for you to actually make it work.

Facebook’s messaging app WhatsApp has been testing the P2P (peer-to-peer) payments in India. If successful, the company could potentially expand the feature globally across its 1,5 billion monthly active users. This has the potential to be an extremely valuable business; for example, if 20 percent of the app’s monthly active users transact $600 each annually, we estimate that it could be worth up to $10 billion if WhatsApp takes just a 0.5% transaction fee from participating banks by leveraging its huge network. We have created an interactive dashboard that shows our underlying forecasts and assumptions related to this estimate. You can modify key assumptions such as percentage of users using P2P payments, average transaction value, WhatsApp’s transaction fee, margins, and valuation multiples to come up with your own valuation estimate for WhatsApp’s P2P payments business. Create your own forecasts, and see whether this business can be meaningful.

An estimated 33% of smartphone users in the U.S. used P2P mobile payments in 2017. Our base case assumes a more conservative figure of 20 percent for WhatsApp globally. In addition, on average P2P users transacted an estimated $1,900 annually in 2017 in the U.S. Our base case assumes this figure at less than one third of this value ($600) for WhatsApp globally. It should be noted that the figures for the U.S. market are per eMarketer’s forecasts, and not actual historical figures. Finally, we assume that WhatsApp will be able to earn 0,5 percent of transaction value in fees, which it could potentially charge from banks (it will likely be reluctant to directly charge fees to users). Due to its huge network advantage and Facebook’s backing, WhatsApp could have some negotiating power related to fees. If you have a different view on these parameters and assumptions, express it using our interactive dashboard and share it.

Meanwhile Facebook’s $19 billion acquisition of WhatsApp sounds smarter and smarter. CEO Mark Zuckerberg announced on the Q4 2017 earnings call that WhatsApp now has 1,5 billion users and sees 60 billion messages sent per day. That’s compared to 1.3 billion monthly users and 1 billion daily active users in July.

The massive growth makes Facebook’s choice to pay more than $19 billion to acquire WhatsApp look prescient. At the time in 2014, WhatsApp had just 450 million monthly active users and 315 million daily active users.

In a slight to Snapchat, Zuckerberg also noted that Instagram and WhatsApp are the No. 1 and No. 2 most popular Story-sharing products, referring to those apps’ clones of Snapchat Stories. Each now each has 300 million daily active users, compared to 178 million on Snapchat as a whole. He also mentions that Facebook’s research suggests that across apps, total social media posting to Stories will soon exceed that of feed posting.

People thought Facebook was crazy to pay such a high price. But messaging is the most critical and time-consuming activity on mobile. And if Facebook didn’t buy WhatsApp, Google probably would have, and messaging would be a two-horse race. Instead, Facebook is massively dominant everywhere but China, between the 1.3 billion-user Messenger and 1.5 billion-user WhatsApp.

Now Facebook is finally getting serious about monetizing WhatsApp with the recent launch of the WhatsApp for Business app. Facebook plans to charge business owners for additional commerce, customer service or broadcasting tools. And with such a massive audience, merchants will be clamoring for them. – forbes.com/techcrunch.com