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India Removes WhatsApp Pay Limit, Reshaping Digital Payments

Highlight

India lifted restrictions on WhatsApp Pay allowing it to serve over 500 million users.
The company would now be able to compete with players like Google Pay and PhonePe.
The NPCI removed the 100 million user cap.
It also deferred the proposed 30% cap on the app’s share of UPI transactions until December 31st 2026.

NPCI allows WhatsApp to roll out WhatsApp Pay to all its users in the market. (Image Credits – Dhiraj Singh/Bloomberg/Getty Images)

India has lifted restrictions on WhatsApp’s payment service marking a significant win for Meta in its largest user market. The move allows WhatsApp to expand its payment service WhatsApp Pay to its entire user base of over 500 million in India.

The National Payments Corporation of India (NPCI), the body overseeing the Unified Payments Interface (UPI), announced the decision on Tuesday, removing the previous 100 million user cap for WhatsApp Pay. Initially, WhatsApp was allowed to roll out its payment service to 40 million users in 2020 with the cap extended to 100 million in 2022.

The expansion positions WhatsApp Pay to challenge dominant players like Google Pay and PhonePe, which currently handle more than 85% of UPI transactions.

India’s UPI platform processes over 13 billion transactions monthly, making it one of the largest digital payment systems globally.

However, concerns about market concentration persist. On the same day, it approved WhatsApp’s expansion, the NPCI deferred implementing a proposed 30% cap on any app’s share of UPI transactions.

This rule, which was first proposed in 2020, will now take effect from December 31, 2026.

A WhatsApp spokesperson expressed the company’s dedication to India’s digital payment ecosystem and said, “We’re committed to making payments on WhatsApp simple, reliable and secure. Our goal is to add value and convenience to users’ lives through various use-cases like bill payments, ticket booking, and shopping. We aim to accelerate digital payments and UPI adoption and continue contributing to India’s digital and financial inclusion agenda.”

India’s payments regulator is also grappling with whether to curb the dominance of PhonePe and Google Pay. These two giants handle nearly 85% of UPI payments with PhonePe alone commanding 47.8% and Google Pay managing 37.1%.

The proposed 30% cap on transaction shares could significantly impact these companies. For instance, PhonePe is valued at $12 billion and is planning an IPO but faces uncertainty due to the regulatory landscape.

Highlighting the issue, PhonePe’s CEO Sameer Nigam said, “If you are buying a share at Rs 100 and you price it assuming we have 48-49% market share, then there is uncertainty about whether it will come down to 30% and by when.”

Smaller fintech startups could benefit if restrictions are placed on giants like PhonePe and Google Pay.

FAQs

Q1. What recent change has India made regarding WhatsApp Pay?

Answer. India has lifted restrictions on WhatsApp Pay allowing it to expand its service to its entire user base of over 500 million in India.

Q2. What was the previous user cap for WhatsApp Pay in India?

Answer. The previous user cap for WhatsApp Pay in India was 100 million users.

Q3. What impact might WhatsApp Pay’s expansion have?

Answer. WhatsApp Pay’s expansion could challenge dominant players like Google Pay and PhonePe potentially reshaping the digital payments landscape in India.