WhatsApp, a tech company that begun its operation with only 55 employees that would later be sold to Facebook for US$19 billion is now telco companies’ biggest enemy that has vowed never to stop disrupting their normal business models and daily operations. WhatsApp started by disrupting telecommunication companies’ SMS messaging platform. Today millions of people across the world send and receive messages via WhatsApp. Telco’s Short Message Service has become completely outdated despite offering daily unlimited SMS for less money. If you send an SMS to someone, chances are that you will get their replies on your WhatsApp when you turn it on.
WhatsApp then turned its attention to calls when it introduced audio and video calls in 2015. As we speak, many users who have access to Wi-Fi or better network reach especially those residing in major towns and cities can now make their calls via WhatsApp. Due to challenges such as poor 4G network coverage and data charges that make calls on WhatsApp not very clear, we can assume telco still rules the voice calls, but this will be for a very short time.
Today, WhatsApp has launched digital payments starting with users in Brazil and may soon be rolled to other parts of the World. Brazilians and entrepreneurs that operate the over 10 million small and micro businesses will be now able to send money securely or make purchases from their local businesses without leaving their chat in addition to viewing a store’s catalog.
“Making payments simple can help bring more businesses into the digital economy, opening up new opportunities for growth. In addition, we’re making sending money to loved ones as easy as sending a message, which could not be more important as people are physically distant from one another,” WhatsApp said in a blog post.
The payments on WhatsApp are enabled by Facebook Pay, the payments service WhatsApp owner, Facebook launched last year. Facebook wants to make it possible for people and businesses to use the same card information across all its family of apps.
WhatsApp digital payment is built with security in mind and a special six-digit PIN or fingerprint will be required to prevent unauthorized transactions. The payment currently supports debit or credit cards from Brazil’s banks; Banco do Brasil, Nubank, and Sicred on the Visa and Mastercard networks and the company is working with Cielo, the leading payments processor in Brazil.
WhatsApp says its digital payment is an open business model a flexible one ready to welcome more partners in the future. Sending money or making a purchase on WhatsApp is free for people but businesses will pay a processing fee to receive customer payments, similar to what they may already pay when accepting a credit card transaction.
The path big tech companies are taking will force telecommunication companies to transition to a single-service industry that offers only data packages to their customers and maybe get their get revenues by serving big businesses in the country. It will be interesting to see how this will unfold especially in Kenya where Safaricom’s mobile money transfer service – MPESA is the giant of the industry.