WhatsApp has introduced payments to its messaging app in India, making it the latest service to let users transfer money to one another with a text.

 

After the pilot in India, this peer-to-peer payments, would be available in Nigeria and other African countries and it will have profound effect on banks already hemorrhaging from revenue losses.



With the new service, users can now link their bank account to their WhatsApp account via Unified Payments Interface (UPI) and begin making payments straight to another user’s bank account through a WhatsApp chat.

 

According to Ndubisi Ekewe, who is familiar with the development, banks have everything to worry about the risks to banks are clear.

 

“The telcos have hated the global messaging app; now the banks join the fray. The risk to banks is clear: if WhatsApp becomes very successful in payments, it may become a small bank of itself. In other words, if people decide to be leaving money in their wallets without moving them to their bank accounts, most banks would struggle [liquidity issues]” Ekewe added.

 

In Nigeria, the rise and popularity of over-the-top (OTT) services has taken a huge toll on the bottom line of telcos across the globe. The OTT services include instant messaging, voice/ video calls and others.

 

Association of Licensed Telecommunication Operators of Nigeria (ALTON), the industry body of all licensed telecoms operators and infrastructure providers, by the consumers, the regulator and the policy makers, has lamented the impact of OTT on the bottom line of carriers.

 

Gbenga Adebayo, chairman, said OTT utilise traditional Mobile Network Operator (MNO) infrastructure to offer social networks, voice and instant messaging services to retain users’ loyalty and drive stickiness with a view creating large on-line communities and eventually attract huge advertisement revenues.

 

The MNOs have neither rights nor control over the OTT services, as customers have the discretion to use the internet as they like.

 

The case maybe worse for Nigerian banks because as Ekewe pointed out, most Nigerian banks are enjoying growing transaction-based fees with ATM charges and all kinds of charges including stamp duty on digital transfer.

 

“WhatsApp could help Nigerians to handle their financial transactions without hitting any bank server, and in the process avoid most of those fees. The excessive fees would push many people to adopt WhatsApp. Just load your WhatsApp wallet, and from there handle basic things of your life. Provided the money is leaving the wallet, banks would not access the stamp duty, SMS fees, etc.

 

And this would explain why bank apps may not add much value in coming years: they would be totally disintermediated. Who needs to leave WhatsApp to launch a bank app before he or she can send money to a friend chatting on WhatsApp? None, if WhatsApp supports payment and transfer. As that happens, watch out for Western Union, MoneyGram and other global remittance entities to begin to struggle as they experience a new level of competition in the market” he added.


http://nigeriacommunicationsweek.com.ng/concerns-for-banks-as-whatsapp-adds-payment/

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