WhatsApp has business chat, payment sectors in its sights
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Mumbai: With more than 1.2 billion monthly active users globally, Facebook Inc.-owned messaging application WhatsApp undoubtedly knows how to keep consumers engaged on its network. Will WhatsApp, however, be able to gain similar traction when it eventually launches its payment and WhatsApp for Business apps?
To begin with, many businesses in India—WhatsApp’s biggest market with over 200 million monthly active users—already use the messaging app to engage with their customers. However, unlike Facebook at Work, WhatsApp has no separate app as yet that allows businesses to talk to its users directly.
“Today, WhatsApp is mostly about talking to your personal contacts. And we have done a very good job at that. If we extend that to business, and allow them to connect with their users and the users, in turn, can connect to businesses they want to connect with, that is where we can make money,” Neeraj Arora, vice-president, WhatsApp, said in a recent interview at his Mountain View office in California, US.
He elaborated that WhatsApp is “doing some experiments in that space to figure how that will work—how can we add value to businesses and how users will react. Both for big and small-sized and medium-sized businesses. You will probably see something on the market soon”.
Facebook, which acquired WhatsApp for $19 billion in February 2014, already has a robust enterprise presence. There are over 450 companies using Facebook at Work, with additions announced regularly, according to a 2 March report by TechCrunch. On 25 February, Brian Acton, co-founder of WhatsApp, said in an interview that while Facebook at Work is for “large enterprises such as International Business Machines Corp.”, WhatsApp for Business is for “the millions of small merchants, neighbourhood shop owners and doctors who are already using WhatsApp and want to reach out to a larger number of people”.
Sanchit Vir Gogia, chief analyst and CEO of Greyhound Research, concurs with this view. “WhatsApp for Business is often confused with Facebook at Work but the audience, intent and expected outcomes from both are quite different,” he said, adding, “While the latter is targeted at medium and large organizations, the former is meant to address micro and small businesses—traders and professionals who aggressively use the platform to communicate with customers and prospects.”
Facebook, though, also has its own successful Messenger. So won’t there be an overlap of users? And is there a likelihood of Facebook and WhatsApp being merged at some time in the future? “Staying independent was part of the deal,” Arora insisted, adding, “The partnership happened because they (Facebook) said they will allow us to do what we were doing at that time. We partner with FB on different things. For instance, we collaborate on technologies, on learnings, fighting spam, etc. But we don’t try to change the strategy of the product.”
Arora also insisted that while Facebook and WhatsApp “are complementary in a lot of ways”, they “serve different kinds of users”. “There are distinct differences too. For instance, FB Messenger is basically for friends on FB to connect on FB whereas WhatsApp connects you with your friends in your address book. Also, FB Messenger is much richer by way of features than WhatsApp and can do a lot more than WhatsApp can. FB Messenger has 1.3 billion global users. WhatsApp has 1.2 billion users. Our product roadmaps are different. It is good for users so that they can opt for whatever they choose,” Arora added.
Meanwhile, WhatsApp is also planning to foray into the payments segment. “India has gone through demonetization. There is a lot of activity in the digital space. Since we are one of the biggest networks, we are evaluating this space,” Arora said but did not commit to any deadline. “There are no timelines as yet,” he asserted.
According to a 23 June report in The Economic Times , WhatsApp is in talks with the State Bank of India (SBI), the National Payments Corporation of India (NCPI) and a few other financial institutions to launch payments via the Unified Payments Interface (UPI) that facilitates instant fund transfer between two bank accounts. A person familiar with the development, but who did not wish to be named, said, “The button will have an Indian rupee on it. Users can click on the button to send the money.
WhatsApp, of course, has its work cut out before it implements WhatsApp for Business and Payments.
The move into payments, for instance, will bring WhatsApp in direct competition with payment apps in India such as Paytm (which has over 250 million users and is reportedly in talks to acquire FreeCharge), the Bharat Interface for Money (BHIM) app developed by National Payments Corporation of India (NPCI), MobiKwik, Oxigen, Hike Wallet (Hike Messenger) and Samsung Pay besides telecom services providers such as Bharti Airtel Ltd and Vodafone India Pvt. Ltd, that have payment banks and the Jio app from Reliance Jio Infocomm Ltd.
WhatsApp for Business, on its part, will face global competition (other than the overlap with Facebook at Work) from Twitter’s ‘Direct Message Card’ feature; Microsoft Corp., which has made it possible to embed Skype chat into any business website; and the newly-launched Business Chat from Apple Inc.
Consumers and small and local businesses have adapted WhatsApp without any prodding or push from the company, mainly because it is easy to use and intuitive, according to Kashyap Kompella, research director at analysis firm Real Story Group. “But if there is a separate app for business, some of the ease of use (of WhatsApp) may disappear. Will local businesses pay for a business app? That’s going to be tricky,” Kashyap opined.
Moreover, there are questions that are periodically being raised about the potential mix of private and enterprise chats besides security and cross-border compliance and regulatory issues.
“With data and identity theft and spamming increasingly becoming an issue, customers are increasingly getting wary of sharing personal information and more importantly being targeted with ads of platforms such as WhatsApp,” Gogia noted. He recommends that to make WhatsApp for Business a success “it needs to walk the fine balance between ad revenues and subscription fee. More importantly, it needs to learn from the customers’ current pains with SMS and email spam and ensure it steers clear of making the same mistakes”.
According to Arora, WhatsApp has always been focused on security and has taken care to ensure that the privacy of users is not compromised. As for the competition, he concluded, “From day one, it has always been about staying focused on what we want to do. Having said that, we keep an eye on the competition, which is good for the ecosystem.”