How does WhatsApp make money or what is the business model of WhatsApp? there are lot more question because unlike other apps WhatsApp’s business model is not simple. WhatsApp is a free, cross-platform and end to end encrypted instant messaging app available in all smartphones. WhatsApp was founded in 2009 by Brian Acton and Jan Koum, former employees of Yahoo!. It was invented as an alternative to the costly SMS service.
It is the third most downloaded Android app in the world which also provides Voice over IP service and owned by Facebook Inc. We all know about WhatsApp and its features from texting to sending a media file to making audio or video calls. WhatsApp is now capable of doing everything. WhatsApp had to compete with many other Asian-based popular messaging apps like WeChat, Viber and Line. Now we don’t see any competitor of WhatsApp in the near future. WhatsApp is also coming up with many new services to generate money for its parent company Facebook Inc.
WhatsApp’s growth rate is exponential because when one person in a social group downloads and advocates using the app, many new users download the app in order to communicate with the original person. These new users then encourage other members of their other social groups to use the app.
Number of daily active WhatsApp Status users from 1st quarter 2017 to 1st quarter 2019 (in millions)
Image source – statista
On February 19, 2014, Facebook announced it was acquiring WhatsApp for US$19 billion in its largest acquisition to date. Facebook, paid $4 billion in cash, $12 billion in Facebook shares, and an additional $3 billion in restricted stock units granted to WhatsApp’s founders Koum and Acton. Facebook paid huge money to acquire WhatsApp and I am sure Mark Zuckerberg has the plan to get the returns on Facebook’s investment. Surprisingly, WhatsApp still not showing any Ads, so how exactly WhatsApp is making money for Facebook? How WhatsApp business works?
Was the acquisition deal was profitable for the Facebook or Facebook overpaid the messenger app? Let’s read the complete article on WhatsApp’s earning source and decide ourself.
What is the WhatsApp Business Model?
Well, WhatsApp is a free app since its initial release. There was no plan to show any Ads for the monetization purpose and still, there is no ad on app. There have been Speculations that Facebook is selling our data to big companies by monitoring our conversation, contacts, and geolocation through WhatsApp. However, WhatsApp claims that it is using end-to-end encryption, which prevents anyone, including WhatsApp, except the sender and receiver from gaining access to the data shared on the app. So, WhatsApp can’t monetize by tracking our behavior or chats like google and Facebook.
So, How Does WhatsApp make money?
Facebook tried to monetize the WhatsApp in a subscription model i.e. by charging an annual fee of 0.99$. But, very soon they realize it might not be a good idea as people might switch to another free messaging platform like WeChat, Telegram, IMO, etc. therefore they decided to make WhatsApp services free again.
In January 2018 WhatsApp released a standalone business app targeted at small business owners, called WhatsApp Business. The aim was to allow companies to communicate with customers who use the standard WhatsApp client. There is much difference between WhatsApp Business and personal WhatsApp.
Facebook has also introduced WhatsApp Enterprise Solution for bigger companies with global customer bases, such as airlines, e-commerce retailers and banks, who would be able to offer customer service and conversational commerce (e-commerce) via WhatsApp chat, using live agents or Chabot. WhatsApp will be providing multiple business APIs for companies to build a solution or a product for their company.
Customers might never be charged and service may remain free for life but definitely, Business will be paid to Facebook for using WhatsApp Business solution to increase their business. There are more than 3 million companies already using WhatsApp Business app and adding more companies every day.
WhatsApp Payments is a peer-to-peer money transfer feature that is currently only available in India. WhatsApp has received permission from the National Payments Corporation of India (NPCI) to enter into a partnership with multiple banks in July 2017 to allow users to make in-app payments and money transfers using the Unified Payments Interface (UPI). Now, people will have the option to use a single app to do their daily money transfer while they chat and send media file on the same app. how cool is that? WhatsApp surely going to get their commission in return to the payment transfer facilitating.
WhatsApp has shown its interest in entering into the cryptocurrency business. On February 28, 2019, The New York Times reported that Facebook was developing an in-house cryptocurrency that would be incorporated into WhatsApp. The project reportedly involves over 50 engineers under the direction of former PayPal president David Marcus. This “Facebook coin” will reportedly be a stable coin pegged to the value of a basket of different foreign currencies.
Cryptocurrency is said to be future and WhatsApp is already preparing for it. Having more than 1.5 billion active users in over 180 countries will finally going pay off Facebook in the longer run.
What’s More In Near Future For WhatsApp?
Facebook has tried but very soon they recalled the yearly subscription option. However, who knows what’s coming next. There is no other app which can stand against WhatsApp at this moment. WhatsApp may charge in subscription basis and make good money. Considering its current active users Facebook can simply make over a billion per year if it ever goes paid app.
Currently, there are no ads on WhatsApp and they haven’t announced their interest in Ads based revenue model like other messenger services. However, they still have the option to sell ads in the future. But the policy of WhatsApp says that it’ll be charge free and ads free forever.
Facebook’s decision to acquire WhatsApp and to go freemium and ad-free was a wise and timely action. Its growth is exponential and it is adding millions of new user every month. Having a huge active user base is going to generate billions every year in the near future.