WhatsApp Payments Followup, Uber to Sell Southeast Asia Unit to Grab

WhatsApps Payments Follow-Up

There was another angle to Paytm Vs WhatsApp debacle that I missed in my article last week. And that’s why NPCI allowed WhatsApp to launch, albeit limited beta, when certain UPI specifications were missing. Vijay Shekhar was quite adamant that he never got such a deal. That he had to comply with every little detail of UPI before launching for any user let alone 1M beta testers. He then went on to call Facebook manipulative and evil. And to put words in his mouth the modern day East India company. While a sprinkle of patriotism is nice the fact remains the Internet knows no boundaries. Unless you are of course China. And I am not sure India is willing to go that route. The country gained a lot from their Silicon Valley diaspora.

Part of Paytm’s success even has a lot to do with outside investments from Softbank and Alibaba. To Indian government’s credit, they refused to allow WhatsApp operate as a full fledge payment company. From ET Tech:

Last year, the messaging app, the largest in India, tried to partner with a private bank in the country to develop a digital wallet app to facilitate payments on its platform. That was when it ran into a reluctant Reserve Bank of India. The regulator was not ready to allow a foreign entity to enter India’s digital payments space, according to multiple stakeholders ET spoke with to piece together the story behind WhatsApp payments.

The fact that they are not operating as a wallet protects them from any legalities. This does not, however, explain why NPCI allowed them to launch without following full UPI specs. More importantly to create a walled garden of payments (iPhone only) when previously no one was allowed to do so. One reason could be the 270M user base. By courtesy of being the most dominant chat app in the country, WhatsApp has the ability to introduce UPI to a lot more people than any previous entrant had. Everyone else had to build their audiences from scratch. This is a typical example of demand controlling the supply. Only, in this case, it’s a regulator who controls the supply. Perhaps more importantly, a regulator willing to go lengths to make India a cashless society. You can’t say they had the wrong intentions.

With that said Vijay Shekhar’s outburst is good for the long haul. Though it might not have stopped WhatsApp from rolling out the beta version the way they wanted to. It will put significant pressures on them and NPCI moving forward.

Uber to Sell Southeast Asia Unit to Grab

From CNBC:

Uber is preparing to sell its Southeast Asia business to Singapore’s Grab in exchange for a sizable stake in the company, according to two sources with knowledge of the matter.

No deal has been reached yet, and the timing of any such deal is uncertain.

This is an interesting development but not a surprising one. Uber is at a point where they need to prove their worth. Not just as a company well run but also with numbers to push for an impending IPO. The company is no longer the default choice especially in countries outside the US. It’s Didi in China, Yandex in Russia, Careem in Pakistan and Middle-east, Grab in Southeast Asia and Ola in India. Even in US Lyft has gained significant market share away from them in 2017. So a deal to the tunes of Didi and Yandex makes perfect sense. I won’t be surprised if a similar deal comes up for Careem and Ola in near future.

Below remarks from Dara (Uber CEO) while talking to Goldman Sachs Technology and Internet Conference the week before suggest this is clearly part of the strategy. And not another bump on the road. From the same CNBC piece:

I think the team ran through an inventory of where we competed, and if we compete on let’s say even on a dollar-for-dollar basis against the local player, paying the same amount to drivers, collecting the same amount from riders, in general where we are now is, if both players are kind of spending equally we tend to win share. We’ve got a better brand, we’ve got better technology, better network, etc. Whatever it is, we tend to win share. There’s certain markets, China and Russia, where that wasn’t true. And if your only competitive advantage, or the only reason you can be in a market is because you can spend money, that’s not exactly a reasonable proposition.