The National Payments Corporation of India (NPCI), the umbrella body which oversees digital payments in the country, on Friday said that WhatsApp will have to stick to its guidelines amid a furore over a beta version of the instant messaging service's payments feature.
Earlier this week, Vijay Shekhar Sharma, founder and chief executive officer of One97 Communications Ltd, which runs digital wallet Paytm, had triggered a controversy after implying that NPCI had bent the rules to suit Facebook-owned WhatsApp, which recently launched a beta version of its Unified Payments Interface-based payments feature.
UPI is a real-time payments system developed by the National Payments Corporation of India (NPCI) that enables digital transactions between banks.
“Facebook is openly colonising our payment system and is customising UPI to their benefit,” Sharma had been quoted as saying by The Economic Times. "UPI was built as an India Stack, now some American monopoly arm-twists UPI for customer implementation."
He had posted tweets along similar lines.
After failing to win war against India’s open internet with cheap tricks of free basics, Facebook is again in play.— Vijay Shekhar (@vijayshekhar) February 14, 2018
Killing beautiful open UPI system with its custom close garden implementation.
I am surprised, champions of open @India_Stack , let it happen ! https://t.co/wIsNuF1AiB
Sharma had also raised other concerns such as security of the payments and interoperability — the ability to transfer money between wallets of different companies.
NPCI on Friday said that WhatsApp will have to abide by all guidelines before the final version of its payments feature is rolled out. These include interoperability and supporting multiple payment options including Bharat QR code.
NPCI also said that it had only granted WhatsApp permission for a limited rollout.
"Currently, NPCI has given its consent to roll out WhatsApp BHIM UPI beta launch with limited user base of 1 million and low per transaction limit," NPCI said in a statement. "Four banks will join the multi-bank BHIM UPI model in phases (in the coming weeks) and full feature product shall be released after the beta test is successful."
At present, India's third-biggest lender ICICI Bank processes the fund transfers on WhatsApp.
Paytm, however, remains unsatisfied and said only some of its concerns had been addressed.
Nice !— Vijay Shekhar (@vijayshekhar) February 16, 2018
I hope full obligation of BHIM like security and tx data sovereignty too will be implemented before full launch. https://t.co/P8vjvkzkgz
A Paytm spokesperson told TechCircle that a product with the "stated violations" could have been tried out with a base much smaller than one million.
"We are still concerned that this statement is silent on the critical issue of safety/security of a financial transaction through UPI, where consumers need to mandatorily sign in with username and password. WhatsApp must implement login and password like all other BHIM UPI apps," the spokesperson said, adding that the NPCI statement was also mum on issues such as sending out SMS notifications for every UPI transaction.
A top Paytm official also told TechCircle that WhatsApp was not showing users their virtual payment address (VPA) directly and the payments feature could not scan BHIM or Bharat QR codes.
Not everyone agrees
Some industry experts and analysts feel that Paytm's reactions are knee-jerk given the threat posed by WhatsApp's huge user base in India of more than 200 million as well as its new policy of allowing business accounts on its platform.
At last count, Paytm claimed to have over 218 million active wallet users on its platform.
"WhatsApp Payments interface works in the same way as the BHIM app. I see no concerns of security with the new feature integrated into the instant messaging app," said Saket Modi, CEO and co-founder Lucideus Tech, the firm which worked in implementing and auditing security of the NPCI-run BHIM app.
Bipin Preet Singh, the CEO and founder of Paytm's rival MobiKwik, told TechCircle that WhatsApp can be expected to abide by all the NPCI guidelines once they are ready to release.
"There has been no unfair advantage provided to WhatsApp or for that matter to Google. The playing field is the same for all players. You will soon see Mobikwik add UPI," he said.
Google had rolled out its UPI-based Tez payments app last year. It claimed in December that it had acquired 12 million active users within 10 weeks of launching in India.
Singh had earlier this week posted a series of tweets which suggested that he saw hypocrisy at play.
All incumbents complaining about Whatsapp getting unfair advantage in its UPI implementation to further its business interests - “Those who live in glasshouses, ....... “ . There is clear record of private companies who got access first and exclusively when UPI was launched.1/n— Bipin Preet Singh (@BipinSingh) February 14, 2018
Those complaining abt Whatsapp are the same folks who refuse to entertain neutral payment options(like @MobiKwik )on their own ecom websites/apps and instead promote only captive wallets. A standard of interoperability should incl wallet acceptance as well 2/n— Bipin Preet Singh (@BipinSingh) February 14, 2018
Paytm's Sharma also indirectly drew criticism from other quarters, including from former FreeCharge CEO Kunal Shah and PayU CEO Amrish Rau.
All companies threatened by Whatsapp payments are going to tag it as anti national and try to pull it down as it’s hard to win on merit against network effects of Whatsapp.— Kunal Shah (@kunalb11) February 14, 2018
This strategy worked for Patanjali and wonder if it will work for payment companies.
Let’s get this clear, Whatsapp and UPI being targeted. Just reminds that even $ Billions are scared of great UX.— Amrish Rau (@amrishrau) February 14, 2018
Paytm, owned by One97 Communications Ltd, has grown exponentially over the last year or so. It runs a payments bank and also operates an e-commerce business in addition to its digital wallet.
It was one of the biggest beneficiaries of the central government’s move to withdraw Rs 500 and Rs 1,000 currency notes from circulation in November 2016, besides its push for a less-cash digital economy.
In fact, the company has reported a 700% surge in traffic, and 1,000% growth in transaction volumes in the period immediately following demonetisation.
The surge in traffic, also helped the company raise $1.4 billion (Rs 9,000 crore) last year from Japan’s SoftBank Group Corp in the largest funding round from a single investor in the country. Its other investors include SAIF Partners, Alibaba Holding Ltd and Ant Financial Services Group.
In late January, Paytm's valuation jumped close to $10 billion (Rs 63,595 crore) after some current and former employees exercised their stock options.