Update: NPCI says it has been working to provide digital payments in the country with globally recognized products BHIM-UPI. “NPCI has given its consent to roll out WhatsApp BHIM UPI beta launch with limited user base of 1 million and low per transaction limit. Four banks will join the multi-bank BHIM UPI model in phases (in the coming weeks) and full feature product shall be released after the beta test is successful. Multi-bank model offer advantages such as transaction load distribution between banks and helps to integrate popular apps easily with BHIM UPI,” the apex organization overlooking payments said in a statement.
“We welcome this statement by NPCI. It addresses the concerns of interoperability violation that we had raised. It also clarifies that the trial has been restricted to 1 million users, though we feel that a product with the stated violations could have been tried out amongst a much smaller base. We are still concerned that this statement is silent on the critical issue of safety/security of a financial transaction through UPI, where consumers need to mandatorily sign-in with username and password. This violation is fundamental and very serious. WhatsApp must implement login & password like all other BHIM UPI apps. This statement is also silent on other issues such as the requirement to send SMS notifications for every UPI transaction. We hope that future rollout will be fully compliant with all the guidelines. We wait to hear NPCI views on some of these missing aspects,” a spokesperson for Paytm said in an emailed statement.
Paytm founder Vijay Shekhar Sharma’s tweet referring to WhatsApp Payments and its implementation of UPI got widespread attention. I brushed it as typical competition at play. It was my assumption, and initial reaction, from limited understanding of the situation. And quite a few tweets and posts on social media seemed to agree with that point of view. While I use Paytm, and WhatsApp Payments, given a choice I would prefer the BHIM app for money transfers and payments since it takes away the need of logging into internet banking and does what needs to be done in a couple of taps.
— Vijay Shekhar (@vijayshekhar) February 14, 2018
I spoke to Deepak Abbot, Senior Vice President at Paytm to understand what exactly was Paytm’s concern around WhatsApp Payments. And over the course of our conversation, I did gather that primarily, there were quite a few points that Paytm was trying to address. And none of them were associated with competition. In fact, in an earlier conversation with BGR India around the initial roll-out of the WhatsApp Payments feature, he said Paytm welcomed competition.
Among the primary concerns raised by Paytm is the mandatory requirement by NPCI that requires any UPI-enabled app to implement password protection features. Abbot believes it’s a good feature to have, and while all UPI-compatible apps (including Paytm) have implemented this feature, WhatsApp seems to have worked around this mandatory security requirement. He adds that the immediate user experience seems to have taken a higher priority than user security.
Besides initial password protection at the application level, NPCI also requires the app to allow a user to logout at any time. Again that seems to be missing from the app. Abbot identifies this as a potential security hole. He believes it’s critical to protect financial details.
Emphasizing the role played by the Government of India and MeitY, he added that among the core objectives of implementing UPI and BHIM as a platform interface was to enable any user on the system to be able to digitally transact with any other user, irrespective of the bank, app or service they use. Unfortunately, a WhatsApp user cannot send money to a non-WhatsApp user, which is going against the basic NPCI guidelines.
He adds that while a WhatsApp user is allotted a UPI ID, it’s a convoluted structure that seems to highlight a focus on usability rather than fulfilling requirements of NPCI, which has been followed by companies such as Paytm. Even immediate competition such as PhonePe, Tez by Google and the BHIM app itself follow all these essential mandatory guidelines.
Finally, NPCI also requires UPI-enabled apps to give their users the ability to send money from their app to bank accounts. Here again, WhatsApp doesn’t seem to allow users to send money to a bank account. Another concern raised by Paytm is the lack of support for scanning Bharat QR code for transacting with merchants or transfer money to other users. Adding to the list is the ability to request money from another UPI user, which is absent in WhatsApp Payments.
Lastly, Abbot added that as per a circular by MeitY, the name was changed from UPI to BHIM, and all apps were to give visibility to BHIM, which seems to have been violated in the case of WhatsApp Payments.
BGR India has reached out to Paytm, WhatsApp and NPCI to get more clarity on the matter and has sought a response on these concerns. We are awaiting their replies and will update the story once we hear from them.