Chat-based payments are here: Game-changer or privacy nightmare?

The payments landscape is changing drastically. From China researching and piloting the very sci-fi palm-based payment system to Musk trying to turn Twitter into a payments-based super app, to Whatsapp rolling out the in-chat payment tool in Singapore and Brazil after an insipid response in India. 

Allow us to elaborate on why we say ‘insipid' response in India, one of the leading countries in the cashless economy revolution. Till 2015, digital transactions were at a nascent stage in India. Now in 2018, when UPI or the Unified Payments Interface, a free platform for fast-and-free account-to-account transactions using a variety of fintech apps (different from Alipay, where users are locked to a single company) was flourishing, Whatsapp piloted its ambitious peer-to-peer digital payment tool with about a million customers. 

Fast forward to 2023, UPI-based payments continue to break all records in India. From January to April 2023, a whopping 91 billion UPI-based payments were recorded. Until December 2022, a total of $1.5 trillion in digital transactions were noted, which is higher than the combined transactions in the US, UK, Germany and France. 

One would think that the Whatsapp wallet would’ve eaten a big pie of that roaring success. The app enjoys massive popularity in India with its 400-million+ user base and easy accessibility yet its payments cap is restricted to less than 20 million users only, that’s 0.01% of the UPI payments volume in India, according to the National Payments Corporation of the country. Other fintech players like GooglePay, Paytm and PhonePe beat the Meta-owned app at its own game. 

So what painted that dismal picture for Meta-owned Whatsapp? And now that the app is rolling out the in-chat payment feature in Singapore and Brazil, can the lessons of failure from India be learned applied to revolutionise businesses and the future of digital transactions in the rest of APAC? 

For Singapore, Whatsapp has announced the wallet feature will use the Stripe Connect and Stripe Checkout solutions, this will allow in-app payments to be made available online and offline. Right now, only a few Singapore businesses can accept payments through WhatsApp, but expansion plans are underway. 

Now, what works in Whatsapp or any chat-based app launching an e-wallet’s favour is the already established digital user base (4.6 million+ for Whatsapp in Singapore) and these consumers do not have to pay for an added subscription tier to use that feature. But the development opens a gamut of possibilities for marketers and brands alike. Integrating an in-chat payment feature into marketing and sales strategies for a seamless end-to-end shopping experience might become the norm but for users it also raises critical questions about privacy, data protection, the risk of scams and fraud. 

Campaign Asia-Pacific turned to leading industry experts to open this can of worms: Can the convenience of in-chat wallets shake up the digital payment scene, or concerns about compromising data will be paramount?

Hwee Peng Koh
Partner and executive creative director, Blaklabs
Founding partner, By the Network

I think this will take the customer journey forward to deliver a more rewarding customer experience. With a Whatsapp wallet, after payment, after-sales service can keep the conversation (remarketing) going in the hope that customers will grow more loyal and brands can build trust. And all this is taking place on your phone.

However, extensive remarketing can also lead to spam and irritation. The biggest hurdle will be security. Despite the reassurances from Meta, with their security and privacy standards being questioned, this could be a tight rope. Singapore is probably one of the safest countries in the world, still digital security is being challenged every day. Scammers are creating fake business accounts and masquerading as bona fide salespeople or government officials. And while the best efforts to raise awareness amongst netizens continue, we are seeing a growing number of warnings.

Consumers must be more considerate and careful when making payments and giving their data to a brand. With PDPA in place, brands are expected to follow the rules and keep the data private. Ideally, businesses must reassure consumers about security measures to show their commitment. But businesses and brands need to be ready with crisis communications in case a data breach happens. One misstep and the trust will be broken.  

Niraj Nagpal
Consultant, Ad/martech 

Brands can further remove the friction of payment processing and enter the conversational commerce domain by integrating WhatsApp payment functionality as part of their sales and customer experience strategy. The boundaries of social, commerce, and offline to online will further erode, and APAC being a mobile-first region, will benefit from this functionality in the long term. The underlying payment processing is handled by leading global payment processors such as Visa, MasterCard, AMEX and Stripe, which have strong protections to protect consumer privacy. 

It's going to be exciting for brands. In-chat payments can broaden the horizons of customer experiences. For brands, the goal should be to augment customer service, not just facilitate transactions.

Consider how your brand can craft meaningful and interactive dialogues around each purchase. We can intertwine storytelling into commerce to make each conversation a personal journey from discovery to post-sale. Success will only be reached if the mantra is 'serve, not sell.' By guiding customers through this personalised experience, we ensure they feel valued and understood, that will boost satisfaction and drive sales. This is where the real growth potential lies.

That said, privacy will be paramount—85% of Singaporeans express concern over how companies use their data. So, the need for personalised experiences also looms. This is the tightrope that brands must navigate. The answer could lie in a "pseudo-anonymous" shopping experience. It allows customers to interact with the brand without disclosing personal data unless necessary (like shipping). Payment details are already obfuscated via WhatsApp’s system, and pairing it with this type of engagement, could build trust among privacy-conscious consumers. 

Ankit Banga
Chief business officer, FCB Six, India

The payment feature transforms WhatsApp into a more powerful tool for businesses, amplifying its popularity as a P2P and B2P communication channel in Singapore. The ‘Click to WhatsApp’ and ‘Payments’ features will likely change the users buying patterns by aiding discovery & reducing last-mile friction on the platform they frequent the most.

Success lies in leveraging this opportunity to provide exceptional customer experiences and ensuring meticulous execution.

Brands must prioritise data protection and security by adhering to the PDPA regulations, including obtaining appropriate consent from customers to collect and process their data and implementing robust security measures to safeguard customer information, being transparent with data handling, partnering with secure payment processors, and leveraging WhatsApp's end-to-end encryption. This ensures customer trust and privacy while utilising the payment feature. 

Jamie Taylor
Head of digital integration, Havas Media, Australia

It can be particularly advantageous for early adopters who have already established direct interactions with customers through a WhatsApp business account or those that actively utilise the platform to provide customers with timely updates on their order statuses, share promotional offers, and showcase new products to be able to have more meaningful customer interactions.

For brands that have integrated their CRM systems with WhatsApp for Business, the introduction of the payment feature holds even more significance. These brands can leverage their CRM's historical purchase frequency data to follow up with customers and drive direct sales strategically. By sending reminders to purchase based on customers' past buying patterns, brands can effectively tap into personalised marketing opportunities and increase their chances of conversion. Brand prioritising customer data management and governance is highly recommended and encouraged. Implementing data encryption and regular security audits are essential to adhere to security best practices.

But a commitment to building a secure and privacy-conscious environment will be needed. Consent management and proactive communication are key to this. For brands already utilising WhatsApp for customer comms, pre-empting the ability to transact and educating customers on the privacy and security elements will build trust.