WhatsApp Could Shake Up Digital Payments in India


Just 16 months after demonetization forever changed the way Indians pay for things, WhatsApp is set to disrupt the market yet again.


With more than 200 million Indians already using its messaging, WhatsApp is piloting a payment service that lets them transfer money to each other. The well-timed move has riled rivals, who say the Facebook Inc. unit hasn’t adhered to security requirements and doesn’t link to other digital wallets.


At stake is an Indian digital payments market that Credit Suisse Group AG estimates could be worth $1 trillion within five years and has homegrown and global players jostling for dominance. WhatsApp joins Google, Alibaba-backed Paytm, a unit of local e-commerce leader Flipkart and dozens of others already vying for customers as smartphone adoption surges. Mobile payments caught fire at the end of 2016 when the government’s demonetization temporarily took 86 percent of all paper currency out of circulation to tackle corruption.


WhatsApp Pay opened to rave reviews and the potential impact of its established user base has drawn comparisons with the way WeChat reshaped payments in China when it expanded beyond messaging.


“WhatsApp is likely to change the digital payments scenario by cannibalizing other wallets’ users and adding new converts,” said Satish Meena, an analyst at Forrester Inc. “Its base of 200 million users, a daily active usage that’s about 20 times higher than Paytm’s, and the fact that Indian users spend a lot more time on WhatsApp than even on parent Facebook has huge advantages,” said Meena.


WhatsApp has become India’s most popular app as hundreds of millions get their first smartphone, using the service to exchange greetings, tell jokes and share videos and gossip. Its enormous reach provides a ready-made user base that doesn’t require spending money to acquire new customers, a massive advantage over rivals.


While it’s still in a test phase and available only to a fraction of its Indian users, WhatsApp Pay is compatible with the country’s Unified Payments Interface. The UPI is a digital payments system to facilitate real-time transactions, developed by the multi-bank umbrella body National Payments Corp. of India.


A full roll-out of WhatsApp Pay could come to all users as early as April, people familiar with the matter said, asking not to be identified as the details are private. WhatsApp and NPCI declined to comment.


The reception from rivals has varied from optimism that the overall market will grow to outright hostility at the newcomer. Critics have questioned the speed at which the NPCI permitted the pilot program without ensuring it fulfilled requirements such as a log-in and compatibility with other digital wallets.


“WhatsApp Pay could create a systemic shock, this could be another ‘demon’ moment for people-to-people payments,” Sameer Nigam, founder and CEO of PhonePe, the payments unit of Flipkart Online Services Pvt., said using a local term for demonetization. “This doesn’t mean they’ll kill everyone, this’ll help add the next 100 million mobile payment users.”


One of the most outspoken critics has been Vijay Shekhar Sharma, founder of Paytm Payments Bank Pvt. His startup has been one of the biggest winners from demonetization and Sharma fired off a barrage of angry tweets, claiming that WhatsApp had bypassed security requirements and that Facebook was trying to create a walled payments garden.


The resistance of rivals stems in part from how China’s mobile payments market has been drastically reshaped. Once dominant Alipay has seen its market share slump since WeChat integrated its payments system with messaging in 2013. WeChat now has 40 percent of mobile transactions, Credit Suisse said, citing data from iResearch.

Early Kinks

WhatsApp can expect to get a boost from users like Vyshali Sagar, a consultant based in Hyderabad who’s already an avid user of the messaging platform. She quickly got familiar with the payments feature, taking to it on the day it was released and linking her bank account. She quickly started using it to pay the neighborhood chaiwallah, or tea seller, send money to family members and split dinner bills with colleagues.


She still uses Paytm to book movie tickets and pay for cab rides and occasionally Google’s Tez as well. While others have added chat to their payments functions, Sagar is unimpressed.


“Payments flow easily within the chat making it simple to drop money to friends or acquaintances in the midst of your conversations,” said Sagar, who noted that the early version still had kinks to work out. “When I delete user chats, the payments history disappears too and I’m left to figure out where the money went.”


By – Bloomberg


Ackman Sells $125 Million of ADP Stake After Share Price Run-Up


Bill Ackman took advantage of a share price increase to sell about $125 million worth of his holdings in Automatic Data Processing Inc., the payroll outsourcer that he targeted in an unsuccessful proxy fight last year.


Pershing Square Capital Management, the activist fund run by Ackman, sold 5 million shares and options in the company, or about 14 percent of its overall ADP holdings, according to a regulatory filing. The sale reduces the New York hedge fund’s stake in ADP to about 7.2 percent from 8.3 percent previously, the filing shows.


Ackman has said the average cost of his investment in Roseland, New Jersey-based ADP, which remains Pershing’s largest holding, was about $105 a share. The company’s shares closed Tuesday at $117.39 each, meaning the value of Pershing Square’s holdings in the company had increased by about $456 million.


Ackman disclosed his initial stake in ADP in August and launched a proxy fight for three seats on the board, including one for himself. The billionaire investor argued the company was underperforming and needed to improve its margins and its offerings to customers. Ultimately, shareholders rejected Pershing Square’s candidates in November.


By – Bloomberg


Amazon launches first debit card in Mexico e-commerce push


Amazon.com Inc launched its first-ever debit card on Tuesday in Mexico, part of a push to encourage shoppers without bank accounts to buy online.


Internet retailers and brick-and-mortar chains in Mexico are investing heavily in e-commerce as the sector gains in popularity, although it is still a small fraction of total retail sales.


Part of the challenge is attracting consumers who are wary of online fraud and do not have access to credit and debit cards. Less than a third of adults in Mexico have credit cards, according to a 2017 government report.


Amazon said that Mexico was the first country where it has offered a debit card, called Amazon Rechargeable, aiming to give customers a new method to shop on its website.


“Clients that don’t have a credit or debit card will find Amazon Rechargeable an easy and practical way to convert cash into a payment method,” said Fernando Ramirez, Amazon’s product manager in Mexico, in a statement.


Easy-access debit cards could help pull people into the formal economy, especially if tied to shopping promotions, Actinver analyst Carlos Hermosillo Bernal said.


“How do you bring formality to the informal sector? You have to make a bridge,” he said.


Shopping chains typically offer credit but rarely debit cards, Hermosillo Bernal added. Amazon’s card, backed by MasterCard and Mexican bank Grupo Financiero Banorte, can be loaded with cash at convenience stores across the country.


Amazon last October began offering a cash payment system at convenience stores including 7-Eleven, similarly targeting shoppers without credit cards.


From – Reuters


JPMorgan invests in fixed-income data startup


JPMorgan Chase & Co has made a strategic investment in Mosaic Smart Data, a company that has developed technology to help banks make their fixed-income sales and trading businesses more profitable.


The bank, whose fixed-income revenue slumped last year, has taken a minority stake in the London-based startup, the companies said in London on Wednesday.


The financial terms of the deal were not disclosed.


Mosaic will use the funding to double its headcount and expand its platform to cover additional asset classes for new and existing clients, according to a person familiar with the deal.


The investment comes after JPMorgan revealed in October that it had signed a multiyear deal to use Mosaic’s technology globally.


Mosaic sells technology that collects and analyzes data from the fixed-income trading divisions of banks to help them make more informed decisions and secure more deals.


The platform helps visualize data and can be used traders to figure out which clients are more likely to be interested in a given deal. It can also be used by bank bosses to determine which trading desk or trader has been performing better.


The investment comes as financial institutions look to adopt more technology that can help them take advantage of the vast amounts of data they store.


Banks have also been looking for ways to deal with a liquidity crunch in fixed-income markets. Tougher post-financial crisis capital requirements have made it more expensive for them to act as market makers in some fixed-income assets, leading their fixed-income divisions to slump.

From – Reuters

Volkswagen assigns $25 billion in battery orders in electric car drive


Volkswagen has picked partners to provide battery cells and related technology worth around 20 billion euros ($25 billion) for its growing electric car program, adding further pressure on U.S. pioneer Tesla. Until its “dieselgate” emissions scandal was revealed two and a half years ago, Europe’s largest automaker had been slow to embrace electric cars.


But the fraud prompted a strategic shift, while advances in batteries and a global fight against pollution are raising pressure on carmakers to adopt zero-emission alternatives.


Volkswagen (VW) said on Tuesday it had secured battery technology deliveries for Europe and China, where it sells 80 percent of its vehicles, and will select a supplier for North America soon.


While Tesla’s much-anticipated Model 3 sedan has already missed some key production targets, VW plans to expand assembly of zero-emission cars to 16 plants globally through the end of 2022 from three at present.


“We have pulled out all the stops over the past months to implement the Roadmap E swiftly and resolutely,” Chief Executive Matthias Mueller said at a news conference, referring to the electric vehicle (EV) program.


VW’s emissions scandal, new Chinese quotas for electric cars and tightening rules on carbon dioxide (CO2) emissions in Europe are causing automakers to focus on green cars and self-driving technology.


VW has a goal to sell 3 million electric cars per year across the group by 2025 and to offer an electric version of each of the group’s 300 models by 2030.


LG Chem, Samsung and Chinese battery maker Contemporary Amperex Technology Co Ltd will deliver batteries to VW, which has no plans to start producing powerpacks by itself, Mueller said.


“Building up expertise and mastering the technology does not necessarily imply that we want to start large-scale assembly of batteries ourselves,” the CEO said. “Others can do it better than we can.”


Although grappling with billions of euros in costs and fines for dieselgate, VW has pledged to spend 34 billion euros on EVs, autonomous driving and new mobility services by the end of 2022, one of the most ambitious plans in the industry.


Separately, the German carmaker reiterated guidance for higher vehicle sales and revenue this year and for a group operating margin of 6.5-7.5 percent after 7.4 percent last year.


In an interview with Reuters TV, Mueller denied top management had a pessimistic view on VW’s business prospects in 2018, but said potential bottlenecks as carmakers rush to get models through new so-called WLTP lab tests for emissions and fuel consumption were causing uncertainty.


“We have to deal with WLTP this year,” he said. “It’s simply too early to speculate whether this will be an especially good year or a normal year.”


From – Reuters

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