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Facebook's WhatsApp Gets Green Light to Expand Mobile Payments in India

11/06/2020 | 03:24am EDT

By Newley Purnell

Regulators in India granted Facebook Inc.'s WhatsApp permission to expand its digital payments service, a win for the company after a delay of nearly three years in its largest market by users.

The National Payments Corporation of India, or NPCI, said late Thursday that WhatsApp can bring the service to a maximum of 20 million users. That is up from the one million cap that has been in place since the encrypted messaging platform in February 2018 began offering payments via its app in a trial service, the first of its kind.

"I'm excited to share today that WhatsApp has been approved to launch payments across India," Facebook Chief Executive Mark Zuckerberg said in a video provided Friday by the company. The service, which is free, enables users to connect their bank accounts to the app and easily send money to one another, just as if they were sending a typical chat.

Still, WhatsApp remains far from making the functionality available to all of its more than 400 million users in India. The NPCI said WhatsApp can start with a maximum of 20 million users--which would be about 5% of WhatsApp's total user base in the country.

A spokeswoman for the NPCI didn't immediately respond to a query about why WhatsApp has been given permission to expand its service. A WhatsApp spokeswoman declined to comment.

WhatsApp faces stiff competition for payments in the world's biggest untapped internet economy, where a boom in cheap mobile data is enabling consumers to make real-time transactions through inexpensive smartphones. Alphabet Inc.'s Google Pay, Walmart Inc.'s PhonePe and Paytm, a homegrown champion, have popular payment services that have been drawing millions of users for years.

A Google spokesman said that as of September 2019 Google Pay had 67 million monthly active users, while PhonePe had 100 million monthly active users as of last month, a spokeswoman said. A Paytm spokeswoman said the company has 150 million monthly active users of its various transaction-related services.

Credit Suisse said in a 2018 research note that digital payments in India should rise nearly five times to $1 trillion by 2023.

A catalyst for mobile-payment growth in India came in 2016, when India's government unexpectedly nullified the largest-denomination cash notes in circulation to curb corruption. That triggered a crunch, and consumers had to stand in long lines for ATMs. Many turned to digital payments.

Facebook is locked out of China, the only other country with more than one billion people, making India a vital market. The Menlo Park, Calif., company said in April that it was spending $5.7 billion, its largest foreign investment, on a new partnership with an Indian telecom operator to expand operations in the nation. The operator's parent company is owned by billionaire Mukesh Ambani, India's richest man.

India could also be key for Facebook as it seeks to wring revenue out of WhatsApp, which it paid $22 billion to acquire in 2014. Last month Facebook said it would offer merchants hosting services, aiming to build upon fees it charges businesses for certain interactions with customers.

But India has also presented Facebook with challenges. Its proposal to provide a free, Facebook-centric mobile service was blocked in 2016 on the grounds that it violated the concept of net neutrality.

And last month a high-profile Facebook executive who was at the center of a political storm over the company's handling of anti-Muslim hate speech left her position.

The Wall Street Journal reported in August that the executive, Ankhi Das, had opposed applying Facebook's hate-speech rules to a politician from the ruling Hindu nationalist party, along with at least three other Hindu nationalist individuals and groups flagged internally for promoting or participating in violence, according to current and former employees.

Write to Newley Purnell at newley.purnell@wsj.com

(END) Dow Jones Newswires

11-06-20 0323ET

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