How Does WhatsApp Make Money?

We use WhatsApp in our daily lives for messaging and sharing media. This is the most famous and used messaging app across the globe. There will be hardly a very narrow percentage of people who are not into WhatsApp usage. However, there is one aspect that many people don’t think about. Have you ever given thought to how WhatsApp makes money? The common way you see to earn in apps is through advertisements and other sponsorship content. However, it is obvious that this app has no such way. In fact, the founders of WhatsApp have always been against the idea of advertisements. Then how come the entire messaging service is provided to us for free? In this article, I will try to explain the brief history of WhatsApp and how WhatsApp makes money.

Who Started Whatsapp!

Two former employees founded WhatsApp in the year 2009. The employees were Brian Acton and Jan Koum. They wanted to create an app that would show the dynamic statuses of everyone on your phone address book. Yes, WhatsApp was never intended to be a messaging app. Koum updated and added a new feature wherein you would get a notification whenever anyone’s status changed. This encouraged people to mock and send funny status changes to each other. This was the time when Koum thought of using this opportunity and develop the entire app into a messaging service. Brian Acton persuaded his five ex-Yahoo! friends, to invest $250,000 in seed funding. They all went ahead and Brian became the co-founder along with Koum in October 2009.

So when did WhatsApp come out finally? After all the above, WhatsApp did come in the year 2009 as discussed above. However, it was only the iOS version, and that too with basic features. Later in the year 2010, the first Android version was released. As of August 2010, both the iOS and Android versions had the messaging feature. There were many changes during the next 4-5 years that are out of the scope of this article. In the year 2014 February, Facebook (now Meta) announced the acquisition of WhatsApp for $19 Billion. This remains the largest acquisition of Facebook/Meta to date.

Why Does WhatsApp Have No Advertisements?

Brain and Jon have been against advertisements right from the start. Their main aim has been to create a messaging service for users and not a place to serve ads. The founders were clear to provide a clean and robust messaging service and were against any gimmick. Being former employees of Yahoo!, they have been running many ads for different target audiences – Yahoo! essentially did this apart from being a search engine. Their thought process was that people wake up the next day to carry on their conversations and share things. They are least interested in guessing or anticipating the kind of ads they would want to see. Hence, the messaging service has to solve their problems and serve them better. They saw WhatsApp as a clear tool for improving the daily life of users across the globe.

As per their mindset, when any app sells advertisements the user becomes the product. This is what they never wanted to happen with WhatsApp.

How Does WhatsApp Make Money?

Before we look into the current monetization model of WhatsApp, let us first understand the previous attempts for the same. WhatsApp started with a subscription fee model. The users had to pay a $1 fee per year to use the service. In some countries, the first year was free and then later the $1 fee was charged. This was until the year 2016. Facebook then thought to change its strategy and wanted to increase the user base of the app. They wanted to become the market leader when it comes to any messaging service available to users across the globe. Facebook was still carrying the no-ad policy as visioned by the founders of WhatsApp. Instead of subscriptions and ads, Facebook started a few ways to monetize some percentage of users using this service. Let us cover those methods and paid services by WhatsApp.

WhatsApp Business API

You must notify the verified business profiles on WhatsApp with a blue tick. It says “verified business”. Yes, the business is charged by WhatsApp to use its messaging service to run the business. In simple words, WhatsApp provides its enhanced services for small and large-scale businesses. Let us understand this in more detail.

If you run a business, you can use WhatsApp messaging service to interact with clients, customers, and even other businesses. The charge is on a per-message basis. The first 24 hours of any conversation are free. Every message after that 24-hour window will be charged depending on the country and the volume of the message. Moreover, the first 1000 conversations are free of cost per month. Now either the business owner can initiate the conversation or the customer. Both messages are charged by WhatsApp. However, when the customer initiates the conversation, the rates are cheaper.

Here Are Some Features That WhatsApp Business Will Offer

1. Customer Interaction

You can interact with your customers and chat right away. The customer can even use WhatsApp to browse other aspects of your business offerings. Moreover, the entire experience appears as if you are chatting with someone with no hidden complexities. It is purely simple and direct.

2. Customer Order Updates

Being a business owner, the tracking details are of priority for you to deliver to your customer. This is where WhatsApp business comes in handy. It lets you share the customer order details easily with the customer. You can also integrate other services such as Google Maps to offer a better tracking mechanism.

3. Inquiry System

The customer can use WhatsApp to inquire about anything related to the business and proceed accordingly.

4. Automated Interaction and Replies

The biggest advantage is the automated and dynamic replies you can generate for your customers. You all may notice certain predefined sets of replies while booking a ticket or maybe ordering something. You are asked to enter your order number and use the menu-driven options in WhatsApp to interact and inquire. This is what WhatsApp allows you. It provides a set of automated and dynamic replies to ease the entire process.

WhatsApp Payments

Another feature that WhatsApp uses to monetize and generate revenue is the WhatsApp Payments feature. It was launched in the year June 2020 in Brazil. However, the Brazilian authorities wanted to promote their own payment platforms and ensure the growth of their economy directly. Following this, WhatsApp was asked to suspend its features in Brazil.

The next step was opening up the payments feature for India. As per the number of users, India is the largest user base for WhatsApp. If you are not running any business, the transfer of money using this feature remains free for the users. WhatsApp only charges businesses for this feature.

Whenever you pay a merchant using WhatsApp Pay, that business is charged a 3.99 percent transaction fee. In order to create a better experience for users, Whenever someone pays a merchant via WhatsApp Pay, he or she will receive a cashback reward of up to $0.40.

Bottom Line

WhatsApp as a messaging service is here to stay. It is not only an app but a habit of millions of us. If you observe, it is normal to say that you can WhatsApp me instead of using the term “message”. This app will continue to serve millions and is quite useful. If you closely see, the revenue generation model of WhatsApp has to be in place. We cannot expect such a great service without paying anything. Thus, the WhatsApp Business and WhatsApp payments can help the company sustain its operation alongside providing a free service. WhatsApp under Meta is progressing at a rapid speed and you can expect a lot of other features in the near future.

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