WhatsApp is now firmly integrated into the everyday lives of millions of people across Europe. The question is, will sending money via WhatsApp become as normal and everyday as sharing holiday selfies and videos of your pets? In India at least, WhatsApp is already testing this new functionality. But what does this mean for the wider payment industry and, in particular, merchants? Roger Niederer, Head Merchant Services at SIX Payment Services outlines what this means for the industry, retailers and consumers.
Check 1: Why did WhatsApp choose India as the test market and who are their international competitors?
The privacy policies in the region are considerably less restrictive and people are less concerned and critical about the use of personal data. In addition, many people across Asia are own a smartphone, but no a PC.
The Chinese equivalent to WhatsApp, WeChat, has been offering a nationwide payment system for about a year now. A similar offer is also available through China's online shopping giant Alibaba with Alipay. Due to the wide acceptance of these alternative payment systems, the use of cash is increasingly seen as being in retreat in China.
Check 2: Are we likely to see WhatsApp Payment to Europe?
In the West the environment for the introduction of mobile payment solutions is more difficult. This is due to the fact that debit and credit cards are well established means of cashless payments, over which the ability to pay via an app (currently) offers no significant benefits. If payment through a smartphone app offered genuine added value to the customer, such as discounts or bonuses, it is possible to conceive that an app based mobile payment market may emerge in Europe.
Check 3: Do merchants need to get active at all?
Even if it is moving at a slower pace than in the rest of the world, there is no doubt that the payment behaviour of Europeans is changing. The proportion of card payments consistently increases year on year. Younger generations of smartphones users become ‘financial deciders’ as they enter into gainful employment and are less averse to alternative payment methods than their parents.
It is vital to bear in mind that in a globalised economy more and more overseas customers are playing a larger role in growth of European businesses. A retailer that can offer potential buyers a familiar and popular means of payment will have a considerable competitive advantage – and of course will eliminate the time consuming exchange of cash.
If new and diverse payment methods become established in Europe, it is likely that no one provider will succeed in achieving a dominant position the way it was possible in China. Therefore, merchants should be prepared to work with a multitude of payment solutions. When partnering with an experienced payment service provider, offering the perfectly matched payment mix will not be a problem.
It is essential to be prepared and understand the fact that the payment process within the retail market is becoming more diverse and is likely to include everything from cash to debit and credit cards, apps through to contactless methods using cards or smartphones. With a payment expert who expertly integrates all these methods of payment, merchants will be fully prepared for a digital future where the customer relationship will not end at the checkout.