MUMBAI • India's smartphone users love Paytm for sending money and WhatsApp for sending messages. Now each company is getting into the other's business.
Paytm yesterday unveiled an updated version of its service that integrates chat features into its market-leading digital wallet.
The move is a pre-emptive strike against WhatsApp, the global messaging app used by about two-thirds of India's 300 million smartphone users.
WhatsApp, which is owned by Facebook, has been developing a person-to-person payment service for India that it plans to introduce in the next few months.
Paytm's senior vice-president of product Deepak Abbot said his company had decided to add the communications feature, called Inbox, because its executives saw millions of people using its service to send money to other individuals without any way of discussing those payments inside the app.
"If I sent money to you, I'd wonder, 'Hey, have you received the money?'" Mr Abbot said. "Either I'd call you, or find another messaging app."
From that problem, a full-fledged chat service was born. Paytm was founded in 2010 as a simple app for paying mobile phone bills.
It has grown exponentially since Prime Minister Narendra Modi shocked India last November with an edict declaring all large bank notes invalid. That so-called demonetisation forced Indians to exchange their cash for new bank notes, a tortuous process that prompted many to look for digital alternatives to pay bills and buy daily necessities.
With nearly US$2 billion (S$2.7 billion) in financing from China's Alibaba and Japan's SoftBank, Paytm marketed itself to small merchants and consumers as an easy way to make all sorts of payments with a few taps on a smartphone.
Meanwhile, WhatsApp has eyed business services and person-to-person payments as a potential way to generate revenue from what has been a free service.
Facebook paid US$22 billion in cash and stock for WhatsApp in 2014. The messaging service has already begun experimenting with verified business accounts in India. The payments feature will let users send payments to one another via a chat message.
WhatsApp's head of business Neeraj Arora said his team was studying opportunities created by India's demonetisation and the government's broader campaign to push more business and services online. "They are trying to digitise every part of society," said Mr Arora, who also sits on the board of Paytm. " It's natural for us to think about improving the experience."