After its plan to offer free internet in India was rejected, Facebook Inc. may soon find that the fastest way to consumers’ hearts is through their wallets. Digitally.
WhatsApp service is preparing to start digital payments in the country, a move that would leverage India’s rush to online transactions after November’s sudden demonetisation, the Financial Times reported. WhatsApp would challenge local players including PayTM, which is backed by Alibaba Group Holding Ltd.
The service would probably tap into India’s Unified Payments System, which is regulated by the Reserve Bank of India (RBI) and was set up to facilitate the transfer of funds instantly over mobile devices. More than a third of Indians now access the internet and mobile-phone penetration stands at around 80%, with both figures rising rapidly. Yet only 78% access the internet at least once per week, according to research compiled by consultancy Kepios.
With much Indian commerce grinding to a standstill because of a shortage of cash, fear of being unable to perform transactions may be a bigger driver of digital-payments adoption than the prospect of gains from efficiency or ease of use.
It’s unlikely any offering would be a major profit contributor for WhatsApp, but it would help achieve what Facebook had hoped for in seeking to provide free web access, which is to get more people online regularly and spur consumers to use its services.
Can Facebook win the consumers’ hearts in India this time?