What WhatsApp Pay means for global commerce
With the news this week that WhatsApp will launch a payment service later this year, Facebook is making its move to becoming a fully-fledged payments business official.
A force for financial inclusion?
The WhatsApp Pay program will roll-out in India before the end of 2019, following tests it has been running in the country since last February. India is a hugely important market for WhatsApp with over 400 million active users and the initial tests the company ran have ramped-up recently when in June Facebook announced they had reached more than a million users.
Following the announcement, Will Cathcart, Global Head of WhatsApp, told Business Today:
“We believe that if we get this right, it will accelerate financial inclusion and bring value for people in India’s fast growing digital economy,”
The ambition for WhatsApp Pay is to make sending money as easy as sending a message, which will be hugely appealing to the many millions of Indians who use WhatsApp.
Following the Indian government’s decision to invalidate much of its paper currency two years ago many young Indians have moved to banking and transferring money through digital payments, despite cryptocurrencies and other alternative payment methods being banned, although individuals trading currencies like bitcoin remain legal.
Where does Libra fit in?
Last month Facebook announced the launch of its own global digital coin, Libra, managed by a governing body called the Libra Association and through a wallet service named Calibra.
The Libra Association has an impressive array of launch partners, from PayPal, Mastercard, and Visa, to Uber, eBay, Lyft and Spotify and aims to have 100 members by next year.
The coin will roll-out early next year and make it seamless for anyone to purchase products or send money internationally and even make charitable donations, no doubt feeding Facebook’s growing ambition to own mobile commerce through its mobile apps (Facebook, Messenger, Instagram, and WhatsApp).
With Facebook looking to roll-out WhatsApp Pay to other international markets this could be the first big use-case for Libra, if as anticipated it is made the default payment method for WhatsApp Pay.
Libra could be the fuel that powers WhatsApp Pay in a way that few others can compete with, even the Chinese giants Ali Pay (from Alibaba), who have partnered with regional payments providers as they roll out internationally, and WeChat Pay. Pony Ma, the CEO of Tencent, the parent company of WeChat has said:
“The technology [of Facebook] is already mature enough so it’s not difficult [to implement]. Now it just depends on whether it can obtain regulatory approval,”
What about regulation?
On the announcement of Libra, Facebook faced huge backlash from governments and US lawmakers have expressed concerns asking the company to halt the project until Congress and regulators examine some of the issues. It seems lawmakers are once again playing catch-up and despite the record $5billion fine it was recently handed by the FTC Facebook seems determined to press ahead with its plans to move into payments.
Yan Meng, vice president of the Chinese Software Developer Network (CSDN), stated that he believed that Facebook’s long-term ambition went beyond Libra being the base currency for a stateless central bank instead suggesting that:
“Nodes of Facebook’s Libra network would represent Facebook to push for utility in various countries for its 2.7 billion users in business, investment, trade, and financial services, that would help complete a full digital economy empire.”
European lawmakers also weighed in echoing concerns for regulators to look more closely at Facebook’s actions. With governments across the world scrambling to keep up and have, or be seen to have, more regulatory oversight of Facebook, and other big tech giants, actions the company has work to do to push through it’s plans for a global digital economy.
Is WhatsApp Facebook Trojan horse?
Facebook clearly see WhatsApp as its trojan horse when it comes to payments and competing on a global scale with WeChat, much in the way they have used Instagram to crush the rise of Snap and copy much of the platform’s innovation, particularly in AR.
Facebook rolled out WhatsApp business across IOS devices in April this year, having been made available on Android back in January, giving businesses the tools to communicate directly with customers.
Combining WhatsApp Pay with their WhatsApp Business app could be a hugely powerful tool for businesses big and small. If customers can not only make purchases but track them within the app and keep in constant communication with the brand that could be a game-changer for customer service.
Could WhatsApp Pay become the defacto way a generation pays for consumable goods online and interacts with brands, sure? Is it healthy that a company who has a long history of misusing user data be the one to build a complete digital economy empire, I’ll leave you to decide?
Just don’t bet against WhatsApp Pay becoming a global economic powerhouse.
Tom Jarvis, Founder and Managing Director – Wilderness Agency