What is WhatsApp payment service and how does it work?

Just like Google Pay and a number of other Indian payment services, the WhatsApp payment service also operates via the Unified Payment Interface (UPI), meaning there is no digital wallet for transactions acting as an intermediary, and all payments take place directly from one bank to another. All you need is to register your UPI-linked bank account in the app and you are good to go. WhatsApp will also let you send money to users who have a UPI ID but do not use WhatsApp payments. For such cases, you just require the UPI ID of the concerned person, or their QR code. 

To start using the WhatsApp payment services, you need to set up your account on the app. Here is a quick guidebook for that.  

[hq]How to make payments on WhatsApp[/hq]

[hans][hstep]Step 1: Open the app and tap on the three dots placed in the top right corner or go to settings (if you are an iOS user)[/hstep]

[hstep]Step 2: Select Payments> Add payment method> Select your bank from the given list[/hstep]

[hstep]Step 3: The app will send an OTP to your number to verify the linked bank account[/hstep]

[hstep]Step 4: Follow the prompts to set up your UPI pin.[/hstep][/hans]

Once you have set up your account, you just need to open a chat with the person you’d like to transact with, tap on the attachment icon and then select the ‘payments’ option. Then you just need to enter the amount to be transferred and your UPI pin, and voila!

Why was the WhatsApp payment service delayed in the first place?

Back in 2018, WhatsApp started testing its payment service in India but due to non-compliance with some RBI rules in the country, it could not officially be rolled out in India until now. According to a previous report, NPCI ordered WhatsApp to store its data locally in India, and share a timeline for when this could be completed. The messaging platform was unable to comply with these norms and hence the delay.

Fast-forward to 2020, NPCI has now given a green signal to WhatsApp to roll out its services, but with a few conditions. Of the 400 million Indian WhatsApp users, the payment service is currently available just for 20 million users. For others, it will be rolled out in a graded manner.

NPCI has also announced that all third party apps -- including Google Pay -- using UPI can only process a maximum of 30 percent of the total volume of UPI transactions processed by third-party app providers, starting 1 January 2021. This cap will be decided on the basis of transactions made on the app in the last three months. 

According to NPCI, “Having a cap on the transaction volume will help in de-risking the entire set-up and is essential as UPI, which surpassed two billion transactions a month mark in October, grows further.”

WhatsApp has also not announced any maximum number of transactions or maximum amount of transactions that one can make within 24 hours. 

According to the Facebook blog, "We designed our payments feature on WhatsApp in partnership with the National Payments Corporation of India (NPCI) using the Unified Payment Interface (UPI), an India-first, real-time payment system that enables transactions with over 160 supported banks. We’re excited to join India’s campaign to increase the ease and use of digital payments, which is helping expand financial inclusion in India."

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