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WhatsApp in India has finally received an approval to go live with a payment feature on the app using the Unified Payments Interface (UPI) by The National Payment Corp of India.

Despite the clearance, WhatsApp Pay has to limit its number of users to 20 million in the first phase, reported The Economic Times. WhatsApp users in India are 400 million strong.

The payment portal was approved on the same day WhatsApp Pay was limited to carry out around 30% of the total volume on the UPI network. This move stems from the regulatory authorities' anxiety with regards to a possible monopoly risk. WhatsApp first started this service in 2018 on a trial basis.

The NCPI on Thursday released a statement that WhatsApp will begin its service in a “graded manner” with its 1 million user base in its beta mode. WhatsApp Pay will use a multi-bank system with ICICI being one of the private players providing payment services.

Following UPI network's 2 billion monthly transaction for the first time and making it the primary retail channel in the country, NCPI approved WhatsApp Pay's proposal. In October, UPI processed 2.07 billion transactions worth 3.86 lakh crore.

UPI's transactions are expected to increase in India with the entry of WhatsApp Pay adding to India's growing prosperity in the consumer market. PhonePe and Google Pay are the top two, most used UPI apps with 835 million and 820 million transactions in October respectively with a market share of 40%.

Both these apps are controlled by American companies and the NCPI expects these corporate giants to cut down their market share till 2023. Currently, both of these app control more than 30% of the transaction. WhatsApp will have to comply with the 30% transaction volume cap as soon as they start.

Industry experts say that the WhatsApp led competition in the market will bring the transaction volume of both PhonePe and Google Pay down. Google Pay, Paytm and PhonePe didn't comment on the matter until Thursday.

NCPI claims that the 30% transaction share, from now on will be calculated on a “three-months rolling basis” and this wpuld be enforced by banks like State Bank of India, Axis Bank and HDFC bank on the backend, added The Economic Times.

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