WhatsApp received approval from regulators in India on Thursday to expand operations of its payments service across the country, following months of setbacks in the long-anticipated rollout of the platform.
The National Payments Corporation of India said U.S.-based WhatsApp can expand its UPI-powered payments user base in a "graded manner," starting with a maximum of 20 million users. It also must work with multiple banking partners.
UPI is a payments infrastructure built by a coalition of large banks in India, operated by the corporation and used by WhatsApp, Google, Samsung and others. It's grown to be the most popular method of digital payments in India.
The National Payments Corporation of India operates retail payments and settlement systems in India, and has created the country's payment and settlement infrastructure.
The regulator said it is "focused on bringing innovations in the retail payment systems through use of technology and is relentlessly working to transform India into a digital economy."
WhatsApp's messaging service currently has more than 400 million users in India, and it first began testing its payments service in the country in early 2018 with one million beta users. It was met with backlash and obstacles from regulators that were concerned with the safety of user data.
Also on Thursday, the National Payments Corporation of India said it would start enforcing a cap on third-party app providers to block them from processing more than 30% of all UPI transactions per month.
The cap will be calculated on the basis of the total volume of transactions processed in UPI during the preceding three months, and will take effect on Jan. 1, 2021. The limitations on competitor apps could help WhatsApp after months of operational hurdles.
Earlier this year, WhatsApp faced legal claims that it was leveraging its dominance in the online messaging market to gain an unfair advantage in the digital payments sphere. In August, the Competition Commission of India dismissed the case, ruling that WhatsApp had not violated any antitrust laws.
The primary argument against WhatsApp's payments service in India was whether the Facebook-owned company would have too much power or monopoly over other payment apps. The original WhatsApp app is already the most popular smartphone app in India.
This could inspire a faster adoption rate compared to the apps of its competition, and some worried that WhatsApp’s payment feature would automatically be downloaded onto the phones of users of the messaging platform. India's antitrust regulator dismissed these claims.
India was WhatsApp's first target market for the launch of its payment platform, but after encountering several obstacles it looked to roll out in Brazil over the summer of this year. The service was suspended in June by Brazil's central bank, determining that its proposal was too big to be fast-tracked and could harm industry competition.
By September, the central bank relented and said WhatsApp would soon be greenlighted to launch the payment service after going through a standard regulatory process.