WhatsApp steps into money transfer game in India

WhatsApp has launched a payments system. Thomas White/Reutersa

WhatsApp will launch a “full feature” inter-bank money transfer service in India, its biggest market, after a test involving a million users, National Payments Corp of India (NPCI) said.

Friday’s statement marks the de facto official launch of WhatsApp’s new service as NPCI is the body set up by the central bank and lenders to oversee payment services.

WhatsApp launched a limited service in India, where it has more than 200 million users, last week. This uses customers’ phone numbers linked to bank accounts to facilitate payments and marks the first global foray into money transfers by the Facebook-owned firm.

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Four banks will join United Payments Interface (UPI) - which powers the payments service - for WhatsApp, NPCI said. At present, India’s third-biggest lender ICICI Bank processes the fund transfers on WhatsApp, the application shows.

WhatsApp’s popularity in India is likely to pose a threat to established players, but it is entering a competitive market after Alphabet's Google launched a payments app last year to compete with local players.

The country’s cashless economy got a boost after Prime Minister Narendra Modi banned old high-value currency notes in late 2016, leading to a surge in online payment providers such as homegrown player Paytm, the biggest in India.

Paytm, which is backed by Alibaba and SoftBank expressed concerns about the security of WhatsApp’s new payments service in a statement released on Friday.