WhatsApp just can’t catch a break. The Facebook-owned messaging app had launched its payment service in Brazil last week after struggling to get approval for a full-fledged rollout in its largest market India for two years, due to various regulatory concerns. However, it now seems to have run into trouble in its second-largest market as well, with the country’s central bank suspending its service.
Meanwhile, Facebook breathed a sigh of relief in India as one of its largest investment received a nod from the country’s antitrust watchdog.
1. Facebook’s Jio investment gets CCI nod
Facebook’s $5.7 billion investment has received a nod from the Competition Commission of India (CCI). For this deal, Facebook has floated a new Delaware, US-incorporated entity called Jaadhu Holdings LLC, which is expected to acquire a minority 9.99% stake in Jio Platforms Ltd.
Along with this investment, WhatsApp has also signed a commercial partnership with Jio Platforms and Reliance Retail to further accelerate Reliance Retail’s new commerce business on the JioMart platform using WhatsApp.
In its submission to CCI, Facebook and the Reliance Industries’ unit had told the Commission that the proposed transaction does not alter the competitive landscape and that Facebook and Jio Platforms would continue to operate independently.
Jio’s fundraising spree
Since the Facebook investment, Jio Platforms has gone on to raise a total Rs 1.15 lakh crore from a clutch of private equity firms and sovereign wealth funds. Overall, Reliance raised about Rs 168,818 crore in two months, including the country’s largest rights issue of Rs 53,124.20 crore.
Last week, Reliance also declared itself as debt-free, delivering on a promise made to the company’s shareholders in August last year.
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2. Aye Finance lands new funds
Google’s private equity arm CapitalG has led a Rs 210 crore investment round in Aye Finance, a non-bank lender that caters to small businesses. The fundraising also saw participation from other existing backers including LGT Lightstone, Falcon Edge Capital, A91 Partners, and MAJ Invest. Aye Finance has raised nearly $70 million so far.
Why is this significant?
The fundraise comes at a time when non-banking financial companies, particularly the smaller and mid-sized NBFCs, are struggling with liquidity as larger banks have turned risk-averse and collections are becoming more challenging.
Aye Finance says it has been able to disburse loans of around Rs 1-2 lakh to businesses with an annual turnover of Rs 10-30 lakh.
What’s the future plan?
Going forward, Aye Finance will look to disburse more loans to existing customers who are reopening their credit lines, while underwriting of new customers would be based on their geography and sector and how they have been disrupted, said the company’s managing director Sanjay Sharma. Read more.
3. Stranded H4 dependent visa holders
Donald Trump’s decision on Monday to suspend certain non-immigrant visa issuances till December 31 could result in temporary separation of hundreds of families for a further six months.
What’s the issue?
As per the US president’s proclamation, H-4 visa holders who do not have a valid visa stamped on their passports as of June 24 are not allowed to enter the country till year-end. This comes after the US embassy and consulates across India were already closed due to the Covid-19 outbreak, due to which people could not get their passports stamped. Read more.
4. WhatsApp Pay setback
Brazil’s central bank has told Visa and Mastercard to halt payments and money transfers via WhatsApp, effectively suspending the messaging app’s payment service, just a week after its launch.
Why was it stopped?
In a statement, the central bank said that rolling out the service without prior analysis of the regulator could cause irreparable damage to the Brazilian Payment System (SPB) in the areas of competition, efficiency, and data privacy. WhatsApp spokesperson said the messaging service would continue working with “local partners” and the central bank to provide this service to its users.
Apart from this, Brazil’s antitrust watchdog Cade had also reportedly blocked WhatsApp’s partnership with credit and debit card operator Cielo to process the payments.
What about India?
Over the past two years, WhatsApp’s payment service has faced several hurdles in India including concerns over its data storage policy and data sharing with its parent entity Facebook. The service was limited to just one million users in its beta phase and a plan to increase this base to 10 million in February did not take off.
Last week, WhatsApp told the Supreme Court that it is now in full compliance with the Reserve Bank of India’s data localisation norms. Read more.
5. Soaring online sales for consumer brands
India’s largest consumer goods companies saw Covid-19-led disruptions significantly boosting online sales in India, with e-commerce sales and contribution to overall business doubling for several firms.
What’s the reason?
Several consumers continue to buy online rather than walking into stores out of fear of catching the virus, while several brick-and-mortar stores are still shut due to liquidity issues, senior executives told ET.
What’s the growth like?
Online contributed just 1% of grocery sales in the country until mid-2017, which nearly doubled to 1.9% by 2019. Industry estimates this may shoot up to over 4-5% this year.
Online contribution to India’s FMCG sales rose nearly 50% year-on-year in the March quarter, according to the latest Nielsen report, while local grocers’ share fell 220 basis points, entirely overtaken by e-commerce and modern retailers.
E-commerce share in total smartphone sales will account for 45% in 2020, as compared to 38-39% of overall sales, as per Counterpoint Research. Read more.
(Illustrations and graphics by Rahul Awasthi)
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