WhatsApp has become ubiquitous in our lives. For some of us it is a way to keep in touch with family and friends all around the world. For some, it is a source of entertainment, information and fake news. And then some of us use WhatsApp for business while some people use WhatsApp Pay for making and receiving payments. Now WhatsApp will be introducing financial products such as micro pension and insurance schemes.
According to Abhijit Bose, India head of WhatsApp, the messaging app will be bringing users “critical financial and livelihood services”. According to the announcement made at a Facebook Fuel for India event, WhatsApp will be tying up with SBI General to bring people affordable insurance products.
Many WhatsApp users already use the Payment feature (the clip icon in the message box opens up to give several options including the payment option). The National Payments Corporation of India (NPCI) has granted its approval for WhatsApp’s UPI based payment services. This makes making money transfers as easy as sending a text message.
Not only does this facilitate payment between apps, it will also facilitate the purchase of other financial products from WhatsApp such as insurance and micro pensions which will be launched at the end of the year. Currently, the user base will be 20 million and WhatsApp will compete with Google Pay, Amazon Pay, PayTM, PhonePe etc.
Generally, a pension is an amount paid by an employer to an employee after retirement. It is usually a fixed amount or a percentage of the salary drawn by the employee upon retirement. However, employees of private entities rarely get the benefit of such an income after retirement. It is usually government employees that can expect to be paid a pension. For others, however, generating post-retirement income is much more difficult. Hence financial institutions offer many different types of pension schemes.
Micro pensions are one type of pension scheme offered by financial institutions. These are products that help to secure a person’s finances later in life. Small amounts are invested during one's working years. These amounts then create a corpus that yields payouts later in life after a set date or age – either a lump sum or paid out periodically. Even people with modest earnings can invest small amounts in these schemes to ensure that they continue to receive some post-retirement amount/ income.
Smartphones are now ubiquitous and practically anyone with a smartphone uses WhatsApp – even people in remote areas and in lower-income groups. There are an estimated 400 million WhatsApp users in India. The introduction of WhatsApp insurance products and micro-pension products will make these facilities accessible for more people according to Bose.
The convenience of having one app to message, to pay and to buy financial products cannot be denied. However, one does have to pause a bit and think of the implications of relying so much on a service like WhatsApp, which is owned by the same Mark Zuckerberg who owns Facebook and Instagram as well. What also comes to mind is the Jio-Facebook deal; where Facebook invested $5.7 billion in Mukesh Ambani's Jio – a company that saw such staggering success that it blew the competition out of the water.
WhatsApp insurance and micro-pension products may also be seen in the context of the antitrust suits that Facebook currently faces in the US. Monopolies of any sort are inimical for the market and consumers. Mark Zuckerberg may want his products to be all things to all people – maybe we don’t want to fall in with his neatly laid plans?
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