WhatsApp eyes lending feature in India as Amazon rolls out Pay Later to tens of thousands of customers

WhatsApp, which began testing its mobile payments feature in India two years ago, could offer at least one more financial service to people in its biggest market.

In a filing with the local regulator in India, the Facebook -owned messaging platform has listed credit as one of the areas it will pursue in the country. The Facebook-owned service declared with the local regulator earlier this month providing credit or loans as one of the “main objects to be pursued by it in the country.” No other financial service is listed in the filing.

At an event in Bangalore late last year, Abhijit Bose, WhatsApp’s head in India, said he believed that the mobile payments market in India, which has attracted dozens of local and international firms in recent years, is still at a very early stage in the country and may eventually see firms move beyond just offering a way for people to send money to one another.

WhatsApp has yet to receive approval from New Delhi for a nationwide rollout of Pay in India. Local media reports claimed earlier this year that WhatsApp had started to expand Pay’s reach in the country in various phases.

Ajit Mohan, a Facebook VP and India head, told TechCrunch in an interview last week that only 1 million WhatsApp users in India, same as before, have access to its mobile payment service.

Dozens of payment services in India have expanded to credit, or online lending, in recent quarters as they search for a business model in the country. A number of firms, including Paytm, India’s most-valued startup, and MobiKwik today offer small ticket credit to millions of users in India.

Tens of millions of users have started to digitally transact money in India in recent years. But the local payments body has removed most of the fees they could levy on banks and merchants to make money. The move has resulted in firms exploring other financial services, such as credit and insurance and target merchants to make money.

This year, Paytm has expanded to serve merchants, launching new gadgets such as a stand that displays QR check-out codes that comes with a calculator and a battery pack, a portable speaker that provides voice confirmations of transactions and a point-of-sale machine with built-in scanner and printer.

The Alibaba and SoftBank-backed company is offering these gadgets as part of a subscription service that helps it establish a steady flow of revenue. Paytm’s Money arm, which offers lending, insurance and investing services, has amassed more than 3 million users.

On Wednesday, Amazon unveiled and began rolling out Amazon Pay Later, a service for “tens of thousands” of eligible customers that would allow them to access instant credit of up to 20,000 Indian rupee ($264) to buy a range of products spanning multiple categories including daily essentials, electronics and clothing. Customers can also use this credit to complete their bill payments on Amazon, the e-commerce giant said. 

Those accessing Amazon Pay Later service can repay the amount in the subsequent month to Amazon at no additional fee. They can also repay the amount at “nominal interest rates” in up to 12 months.

Amazon Pay Later is a unique service that will help customers expand their access to credit and experience the most convenient option of making payments. In current times Amazon Pay later empowers our customers to better manage their monthly spends,” said Mahendra Nerurkar, chief executive of Amazon Pay India, in a statement.

Flipkart’s PhonePe, another major player in India’s payments market, today serves more than 175 million users and over 8 million merchants. Its app serves as a platform for other businesses to reach users. The company is currently not taking a cut for the real estate on its app.

WhatsApp’s expansion in mobile payments in India, estimated to grow to $1 trillion by 2023 (according to Credit Suisse), could create new challenges for the aforementioned players.

Facebook, which like other American tech giants counts India as one of its biggest markets but makes considerably less revenue in the world’s second largest market, “reaffirmed” its commitment to India this month.

The social giant invested $5.7 billion in Reliance Jio Platforms this month to acquire a 9.99% stake in the Indian telecom giant. Over the weekend, JioMart, an e-commerce venture run by Jio’s parent firm, began testing an “ordering system” on WhatsApp, teasing the first peek at the collaboration between Facebook and Indian telecom giant Reliance Jio Platforms.

Online lending could help WhatsApp, which does not charge users any fee or monetizes through ads, explore a way to make money.

WhatsApp has not responded to a request for comment.

[Story and headline updated at 12:09PM IST to add details about Amazon Pay Later rollout in India.]