WhatsApp in-chat payments roll out in Singapore: A new chapter for SMEs or a security risk?

Digital payments are transforming rapidly, and WhatsApp’s recent decision to launch in-chat payments in Singapore highlights this change. The move by Meta, WhatsApp’s parent company, is expected to have a significant impact on local businesses and increase competition among the region’s e-payment providers. However, concerns also arise around security, privacy, and the potential for scams and fraud.

With a user base of 4.6 million in Singapore, WhatsApp’s payment feature provides an ideal platform for businesses to reach customers directly through the messaging app. Already available in Brazil and India, in-chat payments offer great possibilities for business growth, customer engagement, and convenience, especially for small and medium-sized enterprises (SMEs).

The integration of commerce with daily communication for millions of users simplifies transactions further, as transaction fees and limits are absent for the time being. This feature appeals to businesses and consumers alike.

SMEs can particularly benefit from this tool, offering them increased accessibility and seamless customer engagement. Payments are smoothly integrated within the messaging app, streamlining the purchasing process for buyers. This feature enables businesses to better serve customers without the requirement for expensive e-commerce infrastructure, leading to potential growth in sales as customers find convenience in shopping and paying through a single app.

A notable comparison can be made with TikTok, where users spend countless hours interacting with brands and making purchases. In 2022, Southeast Asian users spent US$4.4 billion on the platform, doubling the amount spent in 2021. WhatsApp’s in-chat payments could revolutionise some businesses struggling to establish their online presence.

Taking into account the significant outages experienced by DBS digital banking in May and March, which drastically inconvenienced users, having diverse alternatives is crucial. WhatsApp’s payment feature could encourage healthy competition among Singapore’s e-payment players, with the ultimate beneficiaries being the end-users.

However, questions remain. Maintaining a sustainable business model with no transaction fees is uncertain. It is unclear if and when WhatsApp will charge users, and how much they will charge. Furthermore, there are concerns surrounding the use of transaction data for targeted advertising and data protection measures.

Ensuring complete security of financial transactions on a platform originally created for messaging remains a significant challenge. User behaviour is another issue that could pose risks, as WhatsApp’s vast user base may become an attractive target for scammers.

The Monetary Authority of Singapore can play an essential role in protecting businesses and consumers, by ensuring the safety of users’ data and money. Successful adoption of in-app payments will depend on finding the right balance between seamless transactions and robust security measures.

As the feature expands to more businesses in the coming months, a cautious and well-executed rollout of WhatsApp in-chat payments will ideally benefit SMEs with increased sales and accessibility, alongside a more seamless shopping experience for customers.

Dr Jonathan Chang is the CEO of Fintopia Indonesia, a public policy advisor, and an award-winning researcher, reports Channel News Asia.