WhatsApp making progress on WeChat emulation ambitions

Facebook has been promising some sort of payments solution for WhatsApp, and it seems to be making a bit of progress in Indonesia.

According to reports from Reuters, Facebook is in discussions with several potential partners to offer a mobile payment feature in the app in Indonesia. Although this is not Facebook’s first venture into mobile money, there is a stuttering initiative in India, the Indonesian experiment will focus on creating a digital wallet to tap into one of the worlds’ fastest growing eCommerce markets.

Earlier this year, Facebook CEO Mark Zuckerberg suggested to investors a wander towards mobile money was an ambition of the business, though this should actually surprise few. When you consider the success of Tencent-owned WeChat in diversifying the offering of the messaging app, Facebook is playing catch-up.

For those who haven’t used WeChat, what you can actually do is quite remarkable. The app was solely focused on messaging to start with, but now you can send images, make phone calls, peer-to-peer payments are included, as are in-store purchase via NFC and paying utility bills. Soon enough, cards could become redundant, such is the growing usage of mobile payments through digital wallets and WeChat.

If Facebook could capture a slice of this success, WhatsApp might start to begin paying off the $19 billion Facebook had to fork out during the acquisition.

The original purchase of WhatsApp was seemingly a means to capture a messaging application which was taking the world by storm. However, the data which WhatsApp would have offered the Facebook advertising machine would have been very beneficial. The team has found integrating the two platforms very difficult to date, though mobile money is certainly a way of creating additional revenues.

In Indonesia, the Facebook team is in discussions with several partners to tap into the eCommerce platform, though in India it is focusing on peer-to-peer payments in-app. There are several reasons for the differing approach, regulatory barriers being one, though experimenting with two ideas could offer two new features for a global rollout.

Interestingly enough, something which might get the White House twitchy is the alleged conversation with one of the potential partners; mobile payments firm DANA, which is backed by Ant Financial, an affiliate company of the Chinese Alibaba Group. Considering the current relationship between Washington and Beijing, these must be interesting conversations.

Globally, this is a very good move from Facebook. According to data from Sensor Tower, WhatsApp was the most downloaded application during the first quarter, with 223 million new installs, taking the total north of an estimated 1.5 billion users worldwide. This is a massive addressable audience, representing huge potential if the team can get all the moving parts to align.

A weak France overshadowed Orange’s Q1

The telecom operator Orange reported a flat Q1, with a weak performance in its home market partially compensated by the strength in Africa and the Middle East.

Orange reported a set of stable top line numbers in its first quarter results. On Group level, the total revenue of €10.185 billion was largely flat from a year ago (-0.1%), and the EBITDAaL (earnings before interest, tax, depreciation and amortisation after lease) improved by 0.7% to reach €2.583. Due to the 8% increase in eCAPEX (“economic” CAPEX), the total operating cash flow decline by 10.2% to €951 million.

Orange 2019Q1 Group level numbers.pdf

Commenting on the results, Stéphane Richard, Chairman and CEO of the Orange Group, said that “the Group succeeded in maintaining its high quality commercial performance in spite of a particularly challenging competitive context notably in our two principal countries of France and Spain. Our strategy is paying off since EBITDAal is continuing to grow while revenues remain stable, allo wing us to reaffirm our 2019 objectives”

On geography level, France, its home and biggest market is going through a weak period. Despite registering net gain in the number of customers, the total income dropped by 1.8% to €4.408 billion, the first quarterly decline in two years. The company blamed competition, a one-off promotion of digital reading offer towards the end of the quarter, and “a weaker performance on high-end equipment sales in the 1st quarter of this year”. The move to “Convergence” was positive, but not fast enough to offset the lose in narrowband customers. The competition pressure is still visible. The Sosh package (home broadband + mobile) Orange rolled out to combat Free is gaining weight among its broadband customers, which resulted in a decline of revenues despite the growth in customer base.

Orange’s European markets, including Spain and the rest of Europe, reported modest growth, with strength in Poland (+2.6%) and Belgium & Luxembourg (+3.8%) offset by a weaker Central Europe (-1.9%). The bright spot was Africa and Middle East, which registered a 5.3% growth to reach €1.349 billion revenue, taking the market’s total revenue above Spain and just marginally behind the rest of Europe. The company’s drive to extend its 4G coverage in Africa is paying off, with mobile data service contributing to 2/3 of its mobile growth. Orange Money also saw strong enthusiasm, with the revenue up by 29% and total number of monthly active users totalling 15.5 million.

Both the Q1 results and outlook to the rest of the year spelled mixed messages for the wider telecom market and Orange’s suppliers, but negatives look to outweigh positives. On the consumer market side, the slowdown of high-end smartphone sales and prolonged replacement cycle has once again been demonstrated in the weak numbers in France. On the network market side, Orange predicts more efficiency. This includes both the network sharing deal signed with Vodafone Spain, which is expected to deliver €800 million savings over ten years, and an overall reduction in CAPEX this year.

As the CEO said, “while the level of eCapex for this quarter is higher, it should reduce slightly for 2019 as a whole, as predicted, excluding the effect of the network sharing agreement with Vodafone in Spain announced on 25 April.” This means, to achieve the annual target of reduced CAPEX, the spending will drop much faster in the rest of year. There is no timetable to start 5G auction in France yet, but it will be safe to say that any expectations of 5G spending extravaganza will be misplaced.

On the positive side, Orange has seen its efforts to diversify its business gaining traction, especially in IoT and smart homes. But these areas, fast as the growth may be, only make a small portion of Orange’s total business.

Amazon Pay acquires app aggregator platform Tapzo

Amazon has acquired Indian app company Tapzo in a deal to bolster its digital payments offering.

According to the Economic Times, the deal will be valued between $40-45 million, while co-founders Ankur Singla and Vishal Pal Chaudhary will be brought onto the Amazon team to continue development of the offering. While the acquisition is yet to be confirmed by either party, sources state Amazon is after a shortcut to get in on the mobile money bonanza.

“It would have taken Amazon Pay up to two years to build an entire stack of service offerings to enable efficient use-cases for its payment platform,” one source familiar with the deal stated. “So this acquisition helps them save time and also enables them to spread their cashback offers across a host of services immediately.”

Tapzo is an aggregator platform that allows users to access over 35 apps including Amazon, Flipkart, Ola and Uber through a single screen, but also allows for mobile payments, to pay bills, order cabs and food and book flights and hotels. The most popular service for users to date has been bill payments and recharges, with about 15,000 transactions per month across the two services.

Integrating the Tapzo capabilities into the Amazon Pay business will offer the team plenty of ammunition as the battle for domination in the Indian payments market warms up. While there are several local firms are controlling market share for the moment, PhonePe and Paytm for example, the continued digital revolution in India is attracting the interest on the international scene.

Aside from Amazon, Google has also been carving itself a new revenue stream in India. Its Tez offering has recently been rebranded to Google Pay, and will start offering new services such as pre-approved loans.

Google rebrands payments app ahead of international assault

Google has announced it will rebrand its Indian digital payments app, Tez, to Google Pay as the team readies a launch into new international markets.

Only two years ago many would have considered India a distant, slow-follower of the digital revolution, with the economy still largely being governed by cash (imagine that) and smartphone penetration exceptionally low for its stature. The inspiration of Reliance Jio seems to have tempted the country into the virtual society, and the digital appetite of consumers has been almost insatiable. Not only have data consumption rates sky rocketed, the craving for digital services is clearly apparent.

Google is one of the companies which has benefited considerably with the desire to be digital. Having launched last September, Tez has been adopted by 22 million people in 300,000 cities, towns and villages across the country. During this period, Tez users have made more than 750 million transactions, worth more than $30 billion. The app currently supports 2,000 apps and websites, though this number is set to be supercharged, tying up with digital services such as Uber as well as offline channels including the likes of Big Bazaar, e-Zone, and FBB.

Aside from retail and partner push, the team will also expand to cover micro-loans. Partnerships with banks such as HDFC Bank, ICICI Bank, Federal Bank, and Kotak Mahindra Bank will enable customers to have pre-approved loans paid directly into Google Pay.

While these might seem like incredible numbers, the Telecom Regulatory Authority of India released figures recently suggesting there are 1.14 billion, with Android holding more than 80% of the market share. With only 22 million users currently, the potential for Google’s digital payment app here is massive. And this is only one country. Admittedly it is the second largest in the world by population, and one of the most lucrative when you look at mobile payment adoption, but the decision to rebrand the payment solution is with expansion in mind.

“We have learnt that when we build for India, we build for the world, and we believe that many of the innovations and features we have pioneered with Tez will work globally,” said Caesar Sengupta GM of the Payments business and Next Billion Users Initiative at Google.

“The world has certainly taken notice of India’s digital payments success and our deep investments here with Tez. Many governments are asking us to work with them to bring similar digital payments innovations to their countries.”

Google Payments already exists in 20 markets, though Tez is designed for the Indian market, and this seems to be what has interested the currently un-named governments. To launch a business on the international scene, it makes sense to have a single brand, and it would also be a smart bet to leverage one of the most powerful and influential brands worldwide; Google. According to Brand Finance, Google has the third most valuable brand worldwide, only falling behind Amazon and Apple, explaining the decision.

There might be some stories regarding misinformation and suspect privacy settings, but the Google brand is still one of the most recognisable and trusted worldwide. Ditching the Tez tag is a sensible idea.

Softbank and Yahoo team up to crack mobile money in Japan

Softbank and Yahoo Japan have announced the formation of a new joint venture, PayPay, to launch a QR-based smartphone payment services in Japan by November.

The joint venture will lean on the experience of Paytm, India’s largest digital payment brand and a SoftBank Vision Fund portfolio company, for technology and expertise in mobile payments in the latest efforts to move Japan away from a cash-based society. As it stands, less than 20% of payments across the country are cashless, one of the lowest worldwide for a ‘developed’ economy.

“The Japanese government is taking measures to raise the cashless payment ratio to 40% by 2025, with a long-term goal of 80%, the highest level globally,” Softbank said in a statement. “To aid these efforts, SoftBank and Yahoo Japan established PayPay Corporation in June 2018 and will launch its user-oriented payments platform in the fall 2018.”

With the experience of Paytm, the brand has 300 million customers and 8 million merchants, combined with the presence of SoftBank and Yahoo Japan, the PayPay business certainly has a promising to start to disruption. The Yahoo! Wallet which has approximately 40 million accounts, will act as the foundation, with Softbank leading the sales strategy, while also developing a localised service leveraging Paytm’s technology. Once the new service has been launched, Yahoo Wallet will cease to exist, though a time-frame has not been laid out.

While the adoption of this technology is far from given, the venture does demonstrate the power of the Softbank ecosystem. While it might have looked like a side-project to keep billionaire CEO Masayoshi Son busy, the Softbank Vision Fund offers a wealth of technology expertise for family members to lean on and launch new services. Of course, Vision Fund employees will be looking to find investments which will make money in the long-run, but complementary businesses and technology to aid the progression of current new services would certainly play some role in the decision making.

WhatsApp forced to enter India mobile money market early

The WhatsApp online payments trial received rave reviews in February, however the team is being forced to launch the market-ready version ahead of schedule for fear of being left behind by competitors.

WhatsApp first announced its intentions in the mobile money space back in February, trialling the feature with one million Indian users, though with more than 200 million users of the messenger app in the country there is certainly room to grow. According to Bloomberg, WhatsApp is readying the launch ahead of schedule, with only three partners instead of four, due to fears competitors are streaming too far ahead. HDFC Bank, ICICI Bank and Axis Bank are currently signed up, with the State Bank of India set to join as soon as the systems and processes are ready.

The potential for mobile and online payments in the country is massive. Aside from the rapid digital revolution which has been thrust on users following the democratization of data by Reliance Jio, the Indian Government is keen to take the country away from a cash-society. This focus on the digital world has certainly benefited certainly companies, some of which are less keen about sharing the profits around.

Vijay Shekhar Sharma, founder of Paytm Payments Bank, one of the two dominant players in the Indian online payments space as it stands, has been highly critical. Sharma was one of the beneficiaries of the government’s drive towards digital, and has not welcomed competition in the space. His Twitter feed regularly criticises the decision to grant WhatsApp a license, while also retweeting conspiracy theories about Facebook reading messages and stories questioning the security capabilities of the app.

The other dominant player currently in the market is Google Tez, though the WhatsApp team might be keeping a closer eye on WeChat. The Tencent-owned messenger and social media app has been making moves in the India space, and while it is yet to topple the dominance of Paytm, it arguably presents more of a threat. This is the reason Sharma is doing his best to limit the incursion of social media apps into the Indian payments market, he probably knows they will steal a lot of market share.

When WeChat launched its payment feature in the Chinese market as an alternative to Alibaba’s, it quickly captured market share because it already had an engaged user-base. Users could pay for a variety of products and services through a trusted and secure application, which was already being used for a variety of other features. WeChat kept users inside its walled-garden, and offered the opportunity to remove clutter and redundant apps from valuable real-estate on the home screen.

WhatsApp can replicate this strategy with its 200 million users in the Indian market. Ideally, WhatsApp would have launched on its own terms, but it does still pose a very serious threat to the incumbent players in the Indian market.

Aside from the upcoming conflict, this is one of the first examples of genuine diversification from Facebook, parent company of WhatsApp. To date, all the ‘alternative’ strategies Facebook has used to build the bottom line have ultimately led back to bleeding the same assets through digital advertising. Video does, news does, promotional ads do, everything Facebook does is about monetizing the user while they are on the platform. It is successful for the moment, but there will be a glass ceiling; only so much advertising can be presented to the user before the experience deteriorates.

When you look at the companies who are set to dominate the world for decades, there is genuine diversification. Google has a separate video platform in YouTube, doubling the real-estate for advertising, and also has a burgeoning cloud computing business. Amazon has the world leading cloud IaaS business, while also successfully entered the content subscription market with its Prime service.

Of course this is not a new idea. Coca Cola is a business which also diversifies by acquiring brands and products which allow it to target a different demographic; it owns Innocent Smoothies for example, as well as Powerade. Successful and healthy diversification is about seeking new revenue opportunities, not simply adding addition means to bolster the same advertising machine.

A successful launch into the online payments market could prove to be very lucrative move for the Facebook business.

London welcomes buskers to the digital revolution

Moving into the connected era has threatened the livelihoods of numerous individuals, but a new initiative from Busk In London and iZettle, backed by London Mayor Sadiq Khan plans to bring buskers into the digital economy.

Just like pigeons and pretentious coffee shops, buskers have become a staple of the worlds’ biggest cities, but like checkout employees in the supermarket, their very existence has come under threat. The connected era is all about digital payments and moving towards a cashless society, meaning the fame-chasing buskers were under threat of become penniless. This initiative, launched by Khan over the weekend, will aim to put contactless payment terminals in the hands of the performers.

A small number of performers have been testing the solution over recent weeks, though the scheme will now be rolled out across the 32 Greater London boroughs. The readers will need to be connected to a smartphone or tablet, while the donated amount will be fixed by the performer, and will be compatible with contactless cards, phones, and smartwatches.

“Now, more Londoners will be able to show their support to the capital’s brilliant, talented street performers,” Khan said.

The devices themselves will be provided by iZettle, which seems to have a head-start on Square in this area, though it is not clear whether the performers will have to pay for them up-front. Such devices are becoming more common for small businesses or street vendors, with PayPal recognising the potential for the technology. Last month, the tech giant agreed to acquire iZettle for $2.2 billion, allowing it to expand its presence in in-store payments globally.

Although there are still segments of society who are clinging onto physical cash, trends are heading down the digital avenue. According to data from Visa, contactless payments for transit and Transport for London (TfL) was up 97% over the last 12 months, while in Hong Kong transactions have tripled in the past 18 months, with one in three face-to-face Visa transactions is made via a contactless payment today. Canada is another country streaming ahead of global trends with Visa’s network processing 33 contactless transactions per second in the month of September.

Google wants your smart speaker to pay your bills as well

Google has announced it will launch additional features for its smart speaker software soon, including the ability to pay back friends just by using your voice.

A few years back at a conference, one speaker commented that the banks shouldn’t be looking across the high street for competition, they should be looking at companies like Google and Amazon. With this latest update to the Google Assistant, it does appear this premonition is starting to come true.

In a couple of months’ time, users will be able to instruct their Google Home device to send money to contacts, who will then receive a notification that payment has been received. The assistant will also be able to give friends and family members prompts to pay you back as well. These functions are generally available for those who have the Google Pay application installed already, but this move takes the business closer to the smart home dream.

“You can easily send or request money from your contacts – for free – using the Assistant on Android and iOS phones in the US,” Sam Kansara, Product Manager for Google Pay. “In the coming months, you’ll be able to send money on voice-activated speakers like Google Home.”

The introduction of the Google smart speaker, which could be viewed as a bit of a loss leader, could be seen as a way for Google to get more entwined in your life. Right now most people have a Google email account or use the search engine as default, but what about the rest of the time. That is too much time not to be engaging with Google.

By introducing a quirky way to pay friends back, and removing the friction of logging into online banking, Google is normalising itself in the world of payments. It would not be surprising to see Google partnering with utilities companies before too long as a simpler way to pay your bills. With the payment reminder function being built into your psyche, you won’t even mind Google prompting you for permission to pay your water bill in the future either.

This is where the internet companies are very clever. The technology is probably already developed for Google to take control of your personal finances, but by drip-feeding features into your life the idea of Google taking control of your personal finances is not as intrusive.

The battle between Google and Amazon for control of the smart home is certainly an interesting one, but controlling the users wallet would give a huge advantage. Facilitating the relationship between the user and the commercial world could lead to all sorts of benefits, as well as trust of the user. If you trust your speaker to pay your friends back, you will probably trust it to order you a pizza. This is where the Google search advertising business model could start to make money in the living room.

WhatsApp to enter world of mobile money – first stop, India

WhatsApp has been granted permission to test out a money transfer service in the Indian market, a move which could generate notable ripples in the maturing mobile money segment.

While there are several mobile money services available currently, penetration has been limited. There is noticeable momentum for the idea of a virtual wallet, though a brand such as WhatsApp entering the market could certainly provide a boost in credibility and trust, thrusting adoption upwards.

The National Payments Corporation of India (NPCI) has given its consent to roll out a WhatsApp beta launch in India to test out the money transfer service. Four institutions will join the multi-bank Unified Payments Interface (BHIM UPI) UPI model, which will be announced at a later date, and a full feature product shall be released after the beta test. For the moment WhatsApp will be limited to a user base of 1 million during the test, while only small transactions will be permitted.

This is a very logical step for WhatsApp to take, and does pose a considerable threat to anyone who is currently offering mobile money solutions to its customers. Samsung and Apple are two companies who do offer such services, but only to those who have Samsung or Apple devices. A WhatsApp solution would be applicable to everyone who has a WhatsApp account making the potential pool considerable larger.

The move would also counter any security concerns which some might have. WhatsApp is widely recognised as one of the most secure messaging platforms worldwide, so much so governments are attempting to introduce legislation forcing the firm to weaken its encryption algorithms or introduce backdoors. The introduction of such legislation indicates the spooks can’t hack their way through the WhatsApp security which is a thumbs up for the software’s performance and resilience.

A seemingly unhackable messaging app offering money transfer solutions would certainly be of interest to some. It also builds on a use of the messaging app which is already out there. For those organizing group holidays or larger social occasions, WhatsApp has been used for logistics but also to pass on bank account details to those in the group. Adding a payment feature in the app is simply removing a step in this payment chain.

100% secure is of course impossible, but if you listen to the right people, WhatsApp is as close as you can get for a mass market product. A money transfer service certainly addresses a need of its users and provides reassurance for the security conscious who are currently resisting the mobile money revolution. Should the beta be successful in India, this could prove to be quite a disruption and enabler of growth for mobile money worldwide.

Huawei and UnionPay tie up for global road trip

Huawei has signed a cooperation agreement with UnionPay International to add fuel to the worldwide rollout of Huawei Pay.

The partnership itself will focus on improving the experience for users, but also adapting the platform for international markets. Right now the platform is focused on the Chinese markets, but Huawei has never kept such streamlined ambitions for long with its other products, why should this be any different?

“Open sharing is an important direction for the future of the digital economy and intellectual interconnection, which is why Huawei’s end-user cloud services built an open and globalized smart mobile ecosystem for the end-user experience,” said Alex Zhang, President of Huawei Consumer Cloud Service.

“Huawei hopes to work with partners such as UnionPay International to provide more secure and convenient mobile payment services for every user of Huawei smart devices around the world.”

Huawei Pay is currently only available in China, supported by 66 banks and is compatible with 20 mobile devices, including various mobile phones and smart watches. This number is likely to increase, as are the number of users, owing to the success of Huawei in cracking new international markets. Huawei has successfully negotiated the stereotype of Chinese products being inferior, with its lofty position in the global smartphone market share ranking offering an excellent springboard for additional services.

“UnionPay International carries out extensive cooperation with various players in the payment industry to integrate the advantages of each party,” said Larry Wang, Vice President of UnionPay International. “This cooperation with Huawei is of great significance.

“Firstly, with this agreement, the two sides realize cooperation on a global scale, and issuers outside mainland China can now launch Huawei Pay Pay-as-you-go once connected to the UnionPay Mobile Service Platform, which greatly saves time and costs. Secondly, UnionPay’s innovative products are an important propeller for the business localization of the two parties, and it supports payment upgrades in more countries and regions. Thirdly, cooperation between the two giants will jointly enhance the global influence of China’s independent mobile payment apps.”

Russia will be first on Huawei Pay’s global tour, with UnionPay offering an excellent foot into the market. Currently, UnionPay bank cards are accepted at 85% of POS terminals and ATMs in Russia, while 10 Russian banks have issued about 1.3 million UnionPay bank cards to date. After Russia, the pair will continue the road through Eastern Europe.