After facing regulatory hurdles and courtroom battles for months, WhatsApp has received the approval in India to go live with a payment feature on its messaging platform using the Unified Payments Interface.

The National Payment Corp of India's clearance for WhatsApp Pay limits the number of users who can use the feature on the platform to 20 million in the first phase. Facebook-owned WhatsApp has about 400 million users in India.

The NPCI's approval came on the same day it limited the transactions a third-party app like WhatsApp Pay can carry out to 30% of the total volume on the UPI network. The move is expected to allay fears of regulatory authorities including the Reserve Bank of India over potential monopoly risks.

WhatsApp has been offering the service on a trial basis in India since February 2018.

NCPI in a statement on Thursday said WhatsApp Pay would now go live in a "graded manner" from its current registered user base of 1 million who were using the service in a beta mode. It will use a multi-bank model with one of the payment service providers banks being private lender ICICI Bank, said the organisation that operates the UPI.

NPCI's move comes just days after its popular UPI network has for the first time crossed the 2 billion monthly transaction mark to firmly establish itself as the primary retail payment channel in the country. In October, UPI processed 2.07 billion transactions worth Rs 3.86 lakh crore.

Market participants expect the UPI volume in India to further increase, aided by the entry of WhatsApp Pay and a growing propensity in the country's massive consumer market towards digital payments.

As per latest undisclosed statistics on UPI, Walmart-owned PhonePe is currently the most used UPI app in the country, having processed nearly 835 million transactions in October with a market share of close to 40%, sources with knowledge of the data said. Google Pay is a close second with about 820 million transactions.

Both these applications backed by US-based giants in the past months had exceeded the 30% transaction share. These companies have been given time till 2023 to bring down their market share, the NPCI said in a circular uploaded on its website on Thursday. The move was prompted keeping "to address the risks and protect the UPI ecosystem as it further scales up."

WhatsApp Pay will have to comply with the 30% transaction volume from the onset, as apps with a market share below 30% currently must ensure compliance from 2021.


Industry executives said the entry of WhatsApp Pay would bring down the transaction volumes of both PhonePe and Google.

Google Pay, Paytm and PhonePe didn't comment on the matter till press time Thursday.

According to NCPI, the 30% transaction share will be calculated on a three-month rolling basis, and would be enforced by the regulated payment service provider banks such State Bank of India, HDFC Bank and Axis Bank on the backend.

ET was the first to report in September 2019 about NPCI's plan to enforce such a cap.

The approval to WhatsApp pay comes after months of legal battle at the Supreme Court and at antitrust body Competition Commission of India and the RBI following concerns around possible unlawful bundling of services and non-compliance with data localisation rules.