WhatsApp places blockchain instant payment on trial in the US

23 December 2021

A user checks the Facebook’s WhatsApp application payment feature on his mobile phone. (Photo by Money SHARMA / AFP)

  • WhatsApp is currently testing an instant payment feature using Pax Dollars (USDP) on trial mode for some users in the US
  • WhatsApp integrates with the digital wallet Novi, owned by Meta, formerly known as Facebook
  • WhatsApp has over 2.5 billion users across more than 100 countries worldwide

WhatsApp is currently putting an instant payment feature using Pax Dollars (USDP) on trial mode for some users in the US. This allows users to send and receive funds as quickly and easily as they send photos on the messaging app, with no transaction fees to boot.

To perform this, WhatsApp integrates with digital wallet Novi, owned by Meta, formerly known as Facebook, that was launched as a pilot in October. It uses the stablecoin USDP, which is pegged to the US dollar, so 1 USDP is equal to US$1. USDP is issued by financial services company Paxos and runs on secure blockchain technology. Cryptocurrency exchange Coinbase acts as the custody partner for the transactions. 

“USDP reserves are fully backed by the US dollar and are held 100% in cash and cash equivalents,” said Novi on its website, making it more stable than other cryptocurrencies like Bitcoin and Ether. “We chose Coinbase, which manages US$180billion assets on its platform, to provide custody solutions for the secure storage of our customers’ funds.” If you’re wondering why Novi isn’t using Meta’s own cryptocurrency Diem, the simple answer is that Diem is still in a holding pattern for regulatory approval Stateside. 

How does WhatsApp’s Instant Payment feature work?

Open chat, click on the attachment (the paperclip icon on Android, or the + sign on iPhone), choose ‘payment’ from the menu, follow instructions to log in to Novi (or create a new account), and send any amount to the recipients. There is no limit to how many transactions can be sent either. 

The recipients will get the fund instantly in their Novi account. They can then either keep the money in their Novi account, withdraw it in cash, or transfer it to their bank accounts. The feature is available in both English and Spanish. 

Transferring funds via WhatsApp chat

Transferring funds via WhatsApp chat is not new. The payment feature is already available for users in India and Brazil but uses traditional currencies and limitations.

In India, it works by adding a bank account with an active debit card with UPI (Unified Payments Interface) support to the messaging app. Transfers are capped at 20 times per day and a total amount of 100,000 rupees (approximately US$1,321).

The country has recently approved increasing the user cap for the payment feature, from 20 million to 40 million, in order to not overwhelm its payment system. WhatsApp has more than 400 million users in India alone.

In Brazil, the popular messaging  app is connected to debit, prepaid, or combo cards from select financial institutions. The daily limit for sending is up to 1,000 Brazilian reals (US$174), while a maximum of 20 money transfers is allowed for receiving. There is a monthly limit of 5,000 Brazilian reals to boot.   

Using the in-chat payment will not compromise the end-to-end encryption in WhatsApp and can be done instantly and securely without any fees, eliminating long wait times and high costs. WhatsApp has over 2.5 billion users across more than 100 countries worldwide. A global rollout of the crypto instant payment feature would be a game-changer.