Explained: Why is WhatsApp Pay offering cashbacks and how does it work?

But first, how do you use WhatsApp Pay?

Like other UPI-based apps, to use WhatsApp Pay, users will need a bank account that has their current mobile number seeded into it. On WhatsApp’s ‘Payments’ section, users will be able to add their bank accounts to the UPI service, which will be verified by the app by sending a message to the user’s bank. Once the bank account has been set up in the account, a user can make payments on WhatsApp to a contact or to a UPI ID or by scanning a merchant QR code.

Why is WhatsApp’s cashback scheme significant?

Earlier this month, WhatsApp received clearance from the National Payments Corporation of India (NPCI) to expand its user base on WhatsApp Pay to 100 million from 40 million. This gave the messaging platform a certain threshold to start building products and market the service to consumers.

Providing cashbacks has been among the most relied upon strategies deployed by payment apps to coax consumers into using their platform.

From Paytm to PhonePe, Google Pay to Amazon Pay, all these apps deployed extensive cashback schemes in the initial phases of their expansion.

What does it mean for WhatsApp to be able to expand its user base?

As a result of the NPCI clearance, WhatsApp will be able to add 60 million users to its UPI service and take on heavyweight rivals such as Walmart-backed PhonePe and Google Pay, which command a majority of the transactions that happen on UPI. However, the NPCI has ensured that WhatsApp’s ability to skew the level-playing field is limited given the messaging app has over 500 million users and granting it permission to offer UPI service to all the users at once could impact competition.

The company, on its part, though, is learnt to have asked NPCI for permission to expand its payments to all of its users without a cap.

“Since our initial approval from NPCI, we have been working to deliver a simple, reliable and secure experience for WhatsApp users that we hope will accelerate adoption of UPI for the next five hundred million Indians,” Manesh Mahatme, Director-Payments, WhatsApp India, has said.

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