WhatsApp Pay is WhatsApp's new service that allows users to send money to each other for free and as easily as sending a message and making purchases at small businesses, without having to leave the chat platform. The service debuted in Brazil, the second-largest market for WhatsApp in the world after India, but quickly expanded to the rest of the world within months making WhatsApp the future of digital lending.
Businesses, which can already upload their product catalogs on the commercial version of WhatsApp and answer users' questions, will have to pay a 3.99% processing fee to receive payments from customers, similar to the amount they may already pay when accepting credit card transactions.
This service joins others made by Mark Zuckerberg's company such as Facebook Shops which allows sellers to create digital storefronts on Facebook and Instagram in what analysts estimate to be a 30 billion a year revenue opportunity. The social network has also begun rolling out Facebook Pay, a service similar to WhatsApp payments but for Facebook and its Messenger app, integrating WhatsApp Pay so that users' card information is stored in both services. The social network can thus collect data on spending patterns and compete with Amazon.
Undoubtedly, the strength of Amazon and Alibaba's advertising business is forcing Facebook and Google to fight back in e-commerce. These two companies control two-thirds of the global digital advertising market, but they are seeing Amazon aggressively entering their turf, thanks to more effective advertising, as the propensity to purchase is much higher for the user who is impacted by Amazon advertising than the average user who sees ads on Google and Facebook.
The reality of this scenario goes further because while Amazon has the real purchase information that it can monetize on its advertising platform, Facebook and Google lack the key areas that allow them to compete head-to-head with Amazon and Alibaba in e-commerce territory: payments and logistics. Therefore, having the transaction end on Facebook and Google is a fundamental strategic key to gaining a broader view of what is really happening in transactions between buyers and sellers.
Facebook Pay (and also WhatsApp Pay) allows anyone to pay in any Facebook Shop in the same way as they would on Amazon, eBay, or Aliexpress. In fact, it is a system that only requires a payment method (a credit or debit card, for example) to be added to the Facebook user's account, turning it into a virtual wallet, just like Amazon Pay, Google Pay, Apple Pay or Samsung Pay.
The Future of digital lending
In the data economy, turnover matters little in the short term; the global ranking of major financial institutions by criteria such as categorization by total assets or market capitalization offers little clue as to their future: it is a vision that is as monolithic as it is short-sighted in the face of the new reality marked by the critical mass of data: if artificial intelligence gets better results the more data you have, how can we compare the data generated by 144 million users of Banco Santander with the more than 300 million users of PayPal or the trillions of data that any of the GAFA [Google, Apple, Facebook, and Amazon] could collect from their users in financial matters.
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