When Messenger Apps Adopt Fintech: Privacy Issues and Implications

There are many ways in which the world is divided up: borders, differing cultures, and even vast masses of water serve to partition the globe. Preference per region for Messenger apps is one of the less initially visible ways this is done. 

Although much of the world uses a combination of Facebook messenger and WhatsApp as their primary communication method, the Asian region is much more fragmented. LINE dominates the regions of Japan, Taiwan and Thailand whilst Kakao is the king in the South Korean Peninsula. Despite only claiming the one country of China, WeChat’s sizeable user base is something that it has actively tapped into. All of the above-mentioned apps have made steps to monetize by making the shift from social messenger apps to payment apps. In other words, they are using their existing audience to dip their toes in the territory of fintech and digital banking in doing so altering our views on finance. 

However, no other messaging app has managed to do this more than WeChat. As depicted in this YouTube video (below), through the magic of QR codes China has made its Messenger app a be-all-end-all one-stop-shop for payment.

The app can be used for services such as taxis and cleaning, bike rental and even for self-service convenience stores where all payment is done in-app. This technology is extremely innovative and represents a landmark in cashless payments.

However, the privacy implications for this kind of all-in-one app are huge. As pointed out by the New York Times, this enables the app to collect a staggering volume of personal data about you. Whilst Google does collect data about you, the fact that usage of WeChat follows you into your offline life too means that such data can be easily personably identifiable. 

Moreover, as revealed by Amnesty International, WeChat’s privacy measures leave much to be desired. One example of this is how the app does not offer end-to-end encryption on its messages. Tencent, the company behind WeChat, has also been continually accused of handing over data to the Chinese government leaving some of China’s younger tech-savvy class to leave the messenger app. That’s not to mention how such apps and services psychologically take away the financial gravity of over-spending. 

However, due to its widespread adoption, the app effectively locks you into its ecosystem meaning that there are real-world consequences for deleting it such as losing contact with relatives or being unable to pay for certain services. Moreover, this kind of hegemonic control over the individual is something that other app companies have been looking to implement into their messenger apps too. In particular, the Japanese messaging app Line is attempting to overthrow Japan’s love of cold harsh cash with QR code payments. 

However, in recent years Western messaging apps have also been trying to get a piece of the QR code payment pie. Facebook’s WhatsApp pay is due to launch at the end of this month (May 2020) in India. By allowing people to send payments to anyone, suggests that what WeChat is doing may be on the horizon for WhatsApp. However, instead of China, Facebook is using India as the equally lucrative and rapidly changing playground to experiment. Interestingly, the firm is using the pandemic as a way to drive users saying that it is a safer way to make transactions during this troubled time. 

Moreover, Zuckerberg is also aiming to make sending payments as quick and easy as sending a photo. His plan is to make our messaging apps directly linked to commerce and thus a place where businesses can directly contact us. This marks a dramatic change from the previous intent of such messenger apps where its purpose existed purely to extend our contact with other humans. The already implemented features such as the Instagram Shopping tab suggest that Zuckerberg’s plan is to monetize this connection. 

However, the firm looks like it may run into trouble. Despite still being in its beta stages, the payment solution is under investigation for anti-trust complaints. In particular, the Competition Commission of India is assessing the claim that WhatsApp is abusing its dominant position by offering payment services to its already existing large user base. Previously, the payment solution has also faced problems in regards to compliance with data regulations. 

The fact that Facebook has continued to face problems yet persevere infers an arrogance that due to its monopoly it will eventually overpower regulation. In other words, there is a suggestion that Facebook is aiming to create a product first and let regulation catch up later. 

With plans to introduce loan services after its WhatsApp Pay rollout, perhaps India is right to attempt to halt its introduction. A combination of credit and collection of a surplus of data that a messenger turned payment app offers could spark serious questions surrounding not only the privacy of our social lives but also our financial ones. Quick and easy access to credit has already proved a dangerous combination to young Chinese. 

Moreover, if WhatsApp Pay sees significant adoption, what is a reality in China may become the new normal in India. The fact that WhatsApp already has a sizable user base it can tap into suggests that this is a significant possibility. 

Such success would pave the way for its introduction in western countries and elsewhere. The big question is whether we will trade our privacy for the convenience of a QR code be-all-end-all payment solution. The story of cashless payment penetration in China suggests that the answer to this question is already clear.