POV: WhatsApp Payments

Background:

Facebook has launched its WhatsApp digital payment service in Brazil. Users will now be able to send payments to one another and make purchases from within the app.

Details and Implications:

After testing in three markets: India, Indonesia and Brazil, Facebook has now officially launched WhatsApp payments in Brazil its second largest market with 120 million monthly active users.

The service will allow users to send money to other users at no cost and make purchases without leaving the app. Businesses will have to pay a 3.99% fee for processing the payments for these purchases. Payments will be secured with a six-digit pin or fingerprint technology, ensuring the security of payment information.

Previously WhatsApp Business, an app aimed at small business owners to showcase their products, enabled businesses to create ‘catalogues’ on WhatsApp helping SMBs to reach their customers easily. Now, in Brazil, they will be able to purchase directly from these catalogues.

WhatsApp payments will be facilitated through Facebook Pay that was launched in November 2019 and enables payments on Facebook in a number of markets. This is the first time that it will be available on another app in the wider Facebook portfolio (with the exception of Messenger Payments in the U.S. which was introduced last year to enable users in the U.S. to send payments to one another via the Facebook Messenger app, but isn’t available in other markets yet). Facebook expects to expand Facebook Pay’s capabilities in its family of apps in other markets in the future.

The process of payment is similar to Chinese messaging apps such as WeChat, which integrate payment and other services into messaging apps. Many citizens in China do everything via messaging apps including many payment tasks like banking, bill payments and day to day shopping. Not only does this new payment service increase the functionality of the WhatsApp for users but it is also a move towards increasing Facebook’s revenue stream from WhatsApp.

This launch comes as Facebook is also expanding its ecommerce options across its family of apps with Shops on Facebook and Instagram where users can purchase directly from a virtual store front on business pages. The expansion of Facebook Pay into WhatsApp payments could be a step towards the integration of seamless payment options and ecommerce in Facebook’s family of apps.

Summary:

Expanding Facebook Pay’s capabilities into WhatsApp is one of the many ways that Facebook is expanding its ecommerce capabilities. It could be an interesting development for brands as WhatsApp potentially develops into a multi-functioning app away from a traditional messaging app.

Further Reading

Business Insider | Tech Crunch | Social Media Today | WhatsApp