#334
Turning On The Faucet

Published:

May 02, 2020


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Published:

May 02, 2020


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WhatsApp has 2b customers around the world and 400m in India alone. Facebook acquired the messaging app for $22b in 2014 and has yet to turn the faucets on to monetize its prized asset.

The path to convert eyeballs into dollars for a consumer internet startup has historically been through ads. Due to privacy concerns, Whatsapp was forced to scrap that attempt and is joining the inevitable movement of offering financial services as a meaningful lever for revenue growth.

WhatsApp’s payments business in India will pilot with 10m users via UPI (United Payments Interface). UPI was launched as a real-time inter-bank payment system. Just three years after its inception, the value of transactions through UPI represents 19% of India’s GDP, having amassed over 100m users and processed 1.25b transactions in March alone. Its success has led the US Federal Reserve to propose a real-time gross settlement service.

With the payments revenues limited due to the cap on merchant fees by UPI, the path to unlocking value lies in integrating a full suite of financial services. Whatsapp declared its intent to the local regulator to provide credit or loans (the same week Amazon launched PayLater in the country), in addition to launching message-based e-commerce orders with Jio a week after investing ~$6b in the telecom giant.

Financial products may become a foundational part of every technology company and large consumer brand – and once the faucet is open, it is tough to turn it off...

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