How India’s WhatsApp Could Impact Facebook
Facebook to face off with PayPal
A report in early April on news site The Ken claimed Facebook (FB) was considering launching its WhatsApp payment service in India. This move could put Facebook on a collision course with PayPal (PYPL), Samsung (SSNLF), Tencent, Alibaba (BABA), and Apple (AAPL) for control of India’s digital payments market. These companies have either launched digital payment services in India or are eyeing the market.
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India’s digital payment market is projected to grow to $500 billion by 2020, according to Google and Boston Consulting Group. That growth could see cash transactions fall to ~40% of all transactions in India’s economy by 2025, while non-cash transactions would soar during the same period, as illustrated in the chart above.
Boost to revenue diversification
For Facebook (FB), launching the WhatsApp payment tool in India would support the company’s efforts to diversify its revenue streams beyond online advertising. Competition for Internet advertisers has intensified as marketers are willing to gamble with digital ad providers outside Facebook and Google. As a result, the top and bottom lines of these online advertising giants could be at risk.
To guard against the threat of revenue loss or slow growth due to growing competition for Internet advertising budgets, Facebook is looking to digital payments, hardware products like Oculus Rift, and subscription services like Workplace to strengthen its non-advertising presence.
For investors, talks of launching the WhatsApp peer-to-peer payment app in India could offer insight into Facebook’s monetization strategy for the messaging app. The company has hinted in the past that it doesn’t prefer to make money from the app via advertising.