What is the Business Model of Whatsapp

Whatsapp has launched Payment service

Whatsapp is currently the most popular and widely used app in the world with over 2 billion users and more than 65 billion messages are sent via WhatsApp every day, and most importantly it’s a free app.

In 2014, Facebook bought Whatsapp for a deal worth $19 billion dollars, since then Whatsapp underwent a lot of changes like Introduction of End to End Encryption, Whatsapp Status and Group Video Calling.

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End to End Encryption Simply means that Whatsapp can not see with whom you are chatting and what you are chatting about, it can’t invade your privacy like Facebook which technically mine your data and use that data to show ads and generate revenue.

In Whatsapp’s Case Ads and data mining is technically not feasible nor desirable, unlike Other Social media apps which heavily relies on user data. Now the billion dollar question is-“How will Whatsapp Generate Revenue?” -Because after all $19 billion dollars is a huge amount of money and the investors of Whatsapp want returns on their investments.

Business Model of Whatsapp Explained

1. Business Client Side Model

WhatsApp Business is a free to download app that was built with the small and large business in mind. One can Create a Catalog to showcase their products and services. Using Whatsapp Business is fairly simple and Intuitive to use and one can connect it’s customers easily by using Auto replies, Verified Business Profile, Business Location, Website and Emails etc. WhatsApp can help medium and large businesses to provide customer service support and deliver important notifications to customers.

Whatsapp Business Catalog

Whatsapp has released its Whatsapp Business API through which business houses can manage their orders by their customers.

Now medium and large businesses can power their communication with customers all over the world, so they can connect with them on WhatsApp in a simple, secure, and reliable way.

Whatsapp Business
Whatsapp Business API
Whatsapp Business
Quick Replies

Whatsapp Business app already have Pre Filled -Quick Replies Feature to instantly provide relevant information and answers to customers queries.

Already Several Big MNCs have been using it like Makemytrip, Booking.com, Singapore airlines, iFood ,Uber, Oyo Rooms etc

We want to be there for our customers — wherever they are, whether they’re on or off the road. We’re thrilled to partner with WhatsApp to give drivers in cities around the globe a fast, familiar and reliable way to connect with a member of our team and get their questions answered

Uber

Whatsapp will charge these businesses to allow them to use Whatsapp API and connect with their customers. An API is a secure medium to access the database from source to show the data to end user without needing to actually build anything.

Whatsapp will charge on Per message basis and given the massive user base of over 2 billion users and it can generate significant amount of revenues. Since, Businesses are striving for more customer centric communication channel to serve their customers and whatsapp is currently the most preffered way to communicate.

Not only it will allow companies to deliver their services to customers in more intuitive, fast and correct way but it will also reduce the upfront cost to deliver services which was huge when compared traditional way like phone calls ,Emails etc.

This a Very Sound Business model, already so many businesses are running on API as service model and earning decently and WhatsApp has an advantage of having over 2 billion users.

2. End User Business Model

Digital payment ecosystem is rapidly maturing and a lots of payment apps are available like Google Pay, Paytm, Paypal and many other Digital wallets are getting increasingly popular among the masses which is a huge opportunity for the entrepreneurs to build enterprise on digital payment economy. As the internet penetration deepens and more number of internet users come into digtal world larger is the opportunity and Whatsapp is surely interested in it.

According to Statista Report –

  • Total transaction value in the Digital Payments segment is projected to reach US$4.4 trillion in 2020.
  • Total transaction value is expected to show an annual growth rate (CAGR 2020-2024) of 17.0% resulting in a projected total amount of US$8.3 trillion by 2024.
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Statista Digital Payment Report

Whatsapp hasn’t released any such feature in their app for digital transactions yet although its testing UPI feature in India and its under beta testing, but still its been a year and WhatsApp hasn’t tested and released any global payment feature in WhatsApp.

But the Good News has come that Whatsapp has launched its payment feature in Brazil for Digital payment as a service to directly send and receive money from banks almost instantly.

Whatsapp Business
Whatsapp Business

Since payments on WhatsApp are enabled by Facebook Pay, in the future WhatsApp want to make it possible for people and businesses to use the same card information across Facebook’s family of apps and that’s’ huge benefit for Whatsapp users.

People now will be at much ease since they can now chat and digitally transact with their friends and families securely.

Initially Whatsapp payment will be largely free for end users to capture the market size but in future Whatsapp may charge their users a small transaction fee to generate the revenue. Even with a very small transaction fee it can generate decent revenue since they operate business at scale with billion plus users and transactions.

Whatsapp in its Official Blog has said that :

We have built payments with security in mind and a special six digit PIN or fingerprint will be required to prevent unauthorized transactions. To start, we will support debit or credit cards from Banco do Brasil, Nubank, and Sicredi on the Visa and Mastercard networks -and we are working with Cielo, the leading payments processor in Brazil.

We have built an open model to welcome more partners in the future. Sending money or making a purchase on WhatsApp is free for people. Businesses will pay a processing fee to receive customer payments, similar to what they may already pay when accepting a credit card transaction.

Whatsapp Official

With this Multi Pronged Business Strategy -Whatsapp can now generate revenues from both business client as well as regular users which is kind of the most wholesome and innovative business model in world. Its a win-win situation for Whatsapp, Buisness owners and the End users.

Mark zuckerberg has brilliantly analysed the future of Whatsapp and it leveraged the massive user base to generate billions of dollars as revenue. Whatsapp is truly the future of business promotion and payment system and no business whether small or large should ignore its importance in delivering customer service value .

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