The National Payments Corporation of India (NPCI) has eliminated the UPI user onboarding restriction for WhatsApp Pay (Third Party App Provider), effective immediately. With this advancement, WhatsApp Pay may now provide UPI services to its entire user base in India.

Previously, the NPCI enabled WhatsApp Pay to gradually increase its UPI user base. With this message, the NPCI removes the limits on user onboarding on WhatsApp Pay. WhatsApp Pay will continue to follow all existing UPI norms and circulars for existing TPAPs.

How may this affect WhatsApp users in India?

According to Mehul Mistry, Global Head of Strategy, Issuance Business & Partnerships- Wibmo, a PayU startup, "India has the world's largest WhatsApp user base, with over 532 million monthly active users out of a total WhatsApp user base of 3 billion users worldwide." The NPCI has lifted the WhatsApp Payment cap of 100 million users, allowing Meta to expand the service to all users in India. With this, WhatsApp Payment will be able to compete with India's top two TPAPs: PhonePe (48% market share) and Google Pay (37%). Together, they account for over 85% of all B2C payments in the country.

With the NPCI's removal of the 100 million user cap on WhatsApp Payments, India's 532 million monthly active WhatsApp users will be able to make frictionless, seamless, and convenient payments on their preferred messaging platform.

Today, over 350 million people in India use UPI, with around 168 million using PhonePe as a TPAP and approximately 129 million using Google Pay. With this NPCI advancement, WhatsApp Payment could possibly add 150-200 million new UPI users.

WhatsApp Payment, in addition to the typical UPI functionalities provided by other TPAPs, has the ability to innovate and deliver new payment features such as Split Bill, UPI Circle, and frictionless cross-border payments from countries where the WhatsApp messaging app is popular into India.

According to Mohan K, Founder of TechFini, "The removal of the UPI onboarding limit for WhatsApp Pay not only makes UPI payments more accessible and convenient for a larger audience, but also positions WhatsApp as a major player in India's digital payments ecosystem. WhatsApp Pay had previously been limited in terms of user onboarding, but this change removes that restriction, potentially allowing a much larger portion of India's population, including those in smaller towns, rural areas, and first-time digital payment users, to conduct financial transactions using UPI. This could contribute to greater financial inclusion by allowing more consumers to access digital payment services on a platform they are already familiar with. Also, because WhatsApp has a large user base in India, removing this limit may result in smoother and more widespread adoption of UPI for daily activities, such as sending money, paying bills, and making online purchases, right within the app. Furthermore, WhatsApp's user-friendly layout and smooth integration with UPI allow consumers to transfer money or make payments without having to move between different apps, which is especially useful for those who find other UPI apps or digital wallets difficult to use. Furthermore, because WhatsApp is a well trusted messaging service, users who are apprehensive to use newer platforms may be encouraged to try UPI payments. To develop long-term trust, the focus must also be on assuring security, data privacy, and reliability. Overall, this step makes UPI payments more accessible and easier to use for a broader number of Indians."

What influence might this have on India's payments industry?

According to Mistry of Wibmo, a PayU business, "This move could reduce the market share of the two most popular UPI Payments apps in India, i.e., PhonePe and Google Pay." Together, they account for more than 85% of the market and will eventually align with the 30% market share cap within the next two years, as the NPCI has extended the deadline for the 30% market share cap until December 31, 2026.

Today, over 350 million people in India use UPI, with around 168 million using PhonePe as a TPAP and approximately 129 million using Google Pay. This NPCI waiver will increase the number of consumers on UPI rails while also reducing reliance on the two players, PhonePe and Google Pay, allowing them to scale further and get the next 150-200 million users onto UPI payment rails.

Overall, this development is a significant step for the payments sector, benefiting all parties involved in the UPI Payment Ecosystem.