How Does Whatsapp Make Money?

How does whatsapp make money

Highlights: 

  • WhatsApp processes more than 100 billion messages each day. 
  • The estimated revenue of WhatsApp in 2020 was US$ 5.5 billion. 
  • There are more than 1 billion daily active users in WhatsApp.

WhatsApp is a messaging software app that helps individuals send and receive text messages and calls with each other. More than 100 billion messages are sent through WhatsApp each day, making it one of the most popular messaging services in the world.

However, it is one of those rare apps that does not run advertisements. This makes revenue generation difficult for WhatsApp. So, how does WhatsApp make money anyway?

WhatsApp and its history

WhatsApp was founded in 2009 by Jan Kaoum and Brian Acton. They hated the idea of advertisements. Therefore, they have always advocated ad-free software. So, WhatsApp does not run ads. 

However, if you were a WhatsApp user in its early days (i.e., before 2016), you would know that WhatsApp was not free then. Instead, it earned revenue through subscriptions. 

WhatsApp used to have a subscription fee of US$1 for using it without ads. Moreover, even if it was free for one year, starting with the following year, users had to pay the 1$ subscription fee to keep the app running. 

After a series of venture capital investments from 2011-2013, WhatsApp was finally acquired by Facebook in 2014 for US$ 19 billion. 

In 2016, Facebook canceled the subscription fee for WhatsApp and made it a free app. So, the subscription model of WhatsApp would no longer be able to make money for WhatsApp. 

How does WhatsApp make money?

WhatsApp primarily makes money through two methods as it has no direct revenue channel like ads or subscriptions. 

  • Via the WhatsApp Business API: WhatsApp charges businesses for late replies to their customers. Each response after 24 hours will incur a certain charge. 
  • Via the WhatsApp Pay: A new UPI payment method of WhatsApp where individuals can use the feature free for transactions, but businesses are charged a certain processing fee to receive customer payments. 

WhatsApp Business and WhatsApp Business API

Several features have been added to WhatsApp, and one of them is the WhatsApp Business. WhatsApp Business is a feature where individuals can create their business profiles and become a verified WhatsApp business. 

The WhatsApp Business API is an interface integrated within the WhatsApp Business that allows the users in WhatsApp to communicate directly to their business. Users, as business customers, can inquire about anything relating to their services through the WhatsApp Business API. 

WhatsApp makes money by charging businesses for late replies. A business is given a 24-hour window to reply to any customer inquiries. If the business fails to respond within that time frame, WhatsApp will charge a certain amount for each reply. This amount is fixed but is different for different countries.

It is an ingenious method as it serves two purposes. First, it gives the businesses the push to provide quick replies, and second, users will find it convenient to use WhatsApp for any business inquires as they get fast responses. This makes it a win-win situation for WhatsApp, its users, and its businesses. 

WhatsApp Pay

Along with its increasing user base and diversification modes of revenue generation strategies, Facebook has launched another way WhatsApp can make money in recent years. That is the WhatsApp Pay

WhatsApp Pay is a UPI payment feature that Facebook has enabled in WhatsApp where users can use the app to pay for the services and products through WhatsApp. 

This method has been recently introduced in late 2020. Facebook has tried to introduce WhatsApp Pay in two countries with most of its users: India (308 million) and Brazil (120 million). However, central bank regulations and government policies have made this a difficult task. 

So, how does WhatsApp make money through WhatsApp Pay? The process of performing money-related transactions through WhatsApp Pay will be free between the individuals. However, WhatsApp will charge businesses a certain amount of processing fee to enable them to receive payments from their customers

In Brazil, the processing fee is 3.99% and is charged at the value of the payment. This payment method is targeting the millions of businesses that use WhatsApp daily.

In India, however, the service is only in the first phase of its trial, with only 10 million out of more than 300 million users using this service. 

Users can use WhatsApp Pay in conjunction with other UPI payment apps like Google Pay, and they can use the money directly from their bank accounts for transactions. 

As this service is still new, it is hard to speculate how effective it has been. But with the world increasingly adopting digital payment methods, this method is sure to generate large amounts of money for WhatsApp and its parent company Facebook in the future. 

Also read: How Does Zoom Make Money

How much money does WhatsApp make? 

According to BusinessofApps, the estimated revenue of WhatsApp in 2020 was around US$ 5.5 billion, up from US$ 1.3 billion in 2018. As WhatsApp is a subsidiary of Facebook and not a standalone company, it isn’t easy to estimate its exact earnings. 

However, if we look at its history, we find that WhatsApp has been keen on acquiring more users rather than acquiring more profits

When Facebook acquired WhatsApp in 2014, its user base was only around 400 million. However, it has grown to 2.5 billion seven years later, primarily because of India and Brazil’s massive number of users. Currently, more than 1 billion individuals use WhatsApp daily.

WhatsApp adds around 1 million users to its user base each day. It is the second most downloaded app globally and is the most popular app in over 100 countries.

WhatsApp Revenue FAQs

Why was WhatsApp worth US$19 billion?

Facebook valued WhatsApp at US$ 19 billion mainly because of its user interactions. The app had more interactions than Facebook itself, and it could help Facebook gain tones of user data and stop a potential competitor from taking its place.

Can you use WhatsApp to earn money?

Yes, WhatsApp can be used to earn money. You can promote content URLs, affiliate products, and other applications by sharing their links to your WhatsApp contacts and earn money through WhatsApp.

Is WhatsApp safe to use for money transactions?

WhatsApp Pay uses the UPI payment method for any monetary transactions which is relatively safe. However, it is important to remain aware of security risks and not click on any ‘accept payment’ options easily to avoid losing money through WhatsApp.

Read also: Add members in WhatsApp group without admin

Conclusion

All in all, WhatsApp is a widely popular app that makes money through the WhatsApp Business API and with the newly added payment feature. However, since the payment feature is not that widely used, and WhatsApp does not have any direct revenue generation methods, the only other way of generating money comes from its Business API. 

Perhaps in the future, Facebook will add other features to help generate revenue from WhatsApp as it has the largest user base among several other similar messaging apps like Facebook Messanger, Snapchat, etc.  

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