
WhatsApp eyes lending feature in India as Amazon rolls out Pay Later - makaroni1
https://techcrunch.com/2020/04/28/whatsapp-eyes-credit-feature-for-users-in-india/
======
Abishek_Muthian
I was already immensely concerned over the cognitive hold on millions of
Indians by WhatsApp, financial data and debt makes it even worse.

When all it takes is a single forward from your WhatsApp uncle/aunty to undo
all the rationale induced in the vulnerable members of the family to protect
them against COVID-19, it should be treated the same way as a security
vulnerability on a platform is treated; only in this case the vulnerability is
limited attention/cognitive biases of the users, nevertheless it's the
platform which enables it to be exploited.

I appreciate the steps taken by WhatsApp to limit fake news & misinformation
such as limiting forwards; but it is certainly not enough. They need to
implement aggressive detection, reporting and banning mechanisms for those who
spread even a single misinformation/fake news.

I don't think it's the Engineering effort which stops them from doing that.

~~~
mmm_grayons
> They need to implement aggressive detection, reporting and banning
> mechanisms for those who spread even a single misinformation/fake news.

Two issues with this:

1\. This is simply not a realistic standard in India, a nation which lacks the
basic level of education of many Western nations. While this is true of a few
people in most nations, and while many citizens can't be bothered to check, it
helps if some at least have the background knowledge to do their own fact-
checking rather than just taking the word of one person over another.

2\. The "who decides" problem, best illustrated by yesterday's removal of the
medical opinion of two front-line doctors from you tube because it
"contradicted WHO recommendations". One man's "fake news" is another man's
"front-line reporting".

~~~
Abishek_Muthian
>This is simply not a realistic standard in India, a nation which lacks the
basic level of education of many Western nations

2016 US elections showed western education doesn't help much in defending
against misinformation campaign.

I'm not denying that filtering fake news is going to hard, but when people are
getting killed directly as a result of fake news from a platform[1],
democratic process are undermined by misinformation campaigns, everything
which needs to be done should be done.

As for YouTube moderation policies, at least there are some policies which we
can debate upon.

[1][https://en.m.wikipedia.org/wiki/Indian_WhatsApp_lynchings](https://en.m.wikipedia.org/wiki/Indian_WhatsApp_lynchings)

~~~
ryanlol
> 2016 US elections showed western education doesn't help much in defending
> against misinformation campaign.

How exactly did they show this?

~~~
contravariant
Now I'm somewhat curious whether you don't consider misinformation to have
played a role in those elections or whether you don't consider the U.S. an
example of western education.

~~~
ryanlol
Show some evidence that the misinformation actually had a significant effect.
I know it’s been widely discussed, but I haven’t seen any significant efforts
to quantify the impact.

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agustif
We had a post in HN about some random App doing this two weeks ago or so.. The
author's where whining because they were plugged from the stores.

The guys sent SMS to everyone in your contact list if you didn't pay. LOL

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jmsflknr
Interesting. WhatsApp currently has no business model. No ads. The app is
free. This can be an interesting area to charge users some real money. In
India, WhatsApp is already huge -- 400 million users -- so they have a reach
that is unparalleled in the world's second largest internet market. And
largest open market.

~~~
Nextgrid
WhatsApp's main business model is to infer relationships and social graphs on
behalf of Facebook, since people trust WhatsApp with access to their contacts
even though they might not trust Facebook.

~~~
sdiq
I am in this group and recently my phone had problems. Moved to an older phone
that was within the house. Decided not to give WhatsApp access to my contacts.
The same is now basically as good as useless. I can't start a conversation
with anyone unless I am replying to a previously shared with message. There is
just no way you can input a contact into the message which is certainly a
clever way of inferring the social graph. Well, now I am just about to give in
to them.

~~~
green-bottle
[https://api.whatsapp.com/send?phone=<PhoneNumber>](https://api.whatsapp.com/send?phone=<PhoneNumber>)

I use this link which will open in WhatsApp by default to send a WhatsApp
message to someone who is not in my Contacts and don't want to add to my
Contacts just to send a WhatsApp message.

It will be a pain in the arse to use for all your contacts and probably not
worth the effort as if you use WhatsApp regularly (for an Indian there's no
way around it) you will have sent a message to almost everyone on your contact
list at least once and Facebook will know about it rendering the whole thing
pointless.

~~~
enitihas
Maybe someone can make an entirely offline app doing this, to allow you to
WhatsApp your contacts?

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manishsharan
I think it is pretty smart idea. Facebook has recently bought a 10% stake in
India's large Telco , JIO. Speaking of risk, Jio is very (horribly) efficient
in invading cutomer's privacy as they are datamining literally everything and
also oushing in-your-face-advertizing-inserts. Facebook is also equally
(horribly) efficient in data mining. So using this data from millions of
consumers, they could lower the risk of default. The current default rate for
microfinance in India is 2.9%. ( [https://www.equifax.co.in/about-
equifax/press-releases/-/blo...](https://www.equifax.co.in/about-
equifax/press-releases/-/blogs/the-microfinance-sector-in-india-now-has-a-
default-rate-of-2-9-/) ) . They could easily reduce this rate using this data.
So yeah -- tihs will be really profitable.

~~~
treebornfrog
Not to mention that Jio, the mobile data network, is owned by the richest man
in India (1).

The investment was a strategic one too, Facebook could leverage this
relationship with Jio (reliance) to keep mining data.

Edit: here's a fantastic thread on the relationship between FB and Jio.

[https://twitter.com/iramneek/status/1253305972233105409](https://twitter.com/iramneek/status/1253305972233105409)

(1)
[https://en.wikipedia.org/wiki/Mukesh_Ambani](https://en.wikipedia.org/wiki/Mukesh_Ambani)

------
cryptica
Someone should come up with a lending service where they lend you money and
you never have to pay back. Instead they make a profit by collecting funding
from investors. I think such a service would be very popular.

~~~
AdrianEGraphene
I want to frame this comment and gift it to those whom deserve it most.

------
dmix
> But the local payments body has removed most of the fees they could levy on
> banks and merchants to make money. The move has resulted in firms exploring
> other financial services, such as credit and insurance and target merchants
> to make money.

Ah, unintended side effects that leave citizens worse off at work once
again...

Loans could be fine if done properly but the idea of tons of financial tech
companies being forced to push loans hard in order to offer their original and
far more stable business model swept from beneath their feet is worrying.

~~~
enitihas
How does that leave citizens worse off? Removing charges from payment makes
that comission go to citizens, small businesses and away from the pocket of
big corporations. The fact that big business can't make money by charging for
payment is not worrying. If the credit offering are not good for citizens,
regulations will fix that. Government shouldn't allow everything in the fear
that big business will do something even worse.

~~~
dmix
_Of course_ the citizens will like that its "free" but that doesn't make the
costs of operating the financial networks also suddenly free.

Nor is it guaranteed the loans will be feasible enough business to cover
expenses for the primary financial networks... Let alone covering any sort of
customer service, help fighting fraud and theft, or to invest in expansion to
new markets, or improving their software products, cover their own banking
fees and insurance risks, pay their workers a decent salary, etc, etc.

The government basically limited access to a potentially massive marketplace
that would do wonders for the wider economy, increasing efficacy and
benefiting local business (India's economy is terribly inefficient and
littered with rules that change every region), and instead of charging for the
actual service they are providing they will be forced to push a bunch of debt
onto the communities that they don't need (or some other shady monetization
strategy like selling data and advertisements or other stuff that may even
hurt the original business).

This will also likely further limit the market to a monopoly as it requires
massive scale to get the <1% who might have loans, so they can get good enough
deals with the banks to lower their own fees to have survivable margins. On
top of the main business expenses.

Monopolies are famous for being extremely anti-consumer but still surviving
with little competition because they are the only ones big enough to navigate
the countless legal, regulatory, and technical hoops required.

Destroying the most basic business model... Even before the companies get off
the ground (article says the gov still only granted access to a million
customers) sounds like a terrible idea.

Who knows how much the fees could have declined from competition alone? Or
whether anyone will even continue investing in it if no model exists.

Just saying the government can write even more rules around the debt will make
all problems go away is very naive. Unless your end game is gambling all the
pieces will come together before it all crashes or the government running it
themselves and/or let taxpayers cover the losses?

~~~
enitihas
Every single bank in India offers the exact same free payment service (UPI
based, which these big co apps are also using, identical in functionality),
and that is free just like other bank based free payments. So even if all the
bigcos leave India payment market, it won't make any difference at all.

>and instead of charging for the actual service they are providing they will
be forced to push a bunch of debt onto the communities that they don't need

This is an absolutely ridiculous argument. Your argument boils down to
"Government shouldn't stop bigco from doing anything bad, as then they will be
forced to do even more shadier stuff".

>Destroying the most basic business model... Even before the companies get off
the ground (article says the gov still only granted access to a million
customers) sounds like a terrible idea.

This argument is wrong. First of all, WhatsApp was not granted access to all
customers because they said they weren't ready to interoperate with others,
i.e, whatsapp users couldn't pay google pay users. A fundamental requirement
of UPI is interoperability, so regardless of which app you use, you can pay
anyone on any app. This can be avoided if you are in testing stage, like
WhatsApp was, but then your acesss is not to all customers.

> Who knows how much the fees could have declined from competition alone? Or
> whether anyone will even continue investing in it if no model exists.

The fees are zero via any bank app. I don't see how a bigco can ever offer
lower fees than the providing bank.

------
beilabs
I've been keeping an eye on services After Pay in Australia for years. I often
thought about rolling it out in Nepal and other developing countries and then
I stopped. I came to the conclusion that there is an even greater amount of
risk in countries where such credit is not normally available, a huge lack of
capital for most people and families is the norm and decided that this would
be a predatory practice. So I stayed away.

With everything happening right now, it's incredibly irresponsible for such a
product to be released in a market that is unprepared to deal with the
consequences.

Starvation for many families who would avail of this service is a fact. Many
have come out and said that they will probably starve long before they
contract any virus. Scary stuff. Shame on Amazon and shame on Facebook!

~~~
pcr0
You're saying that an entire country doesn't deserve a new credit service
because of a lack of existing credit services in that country.

1\. You're ignoring middle class and well-off people in those countries. 2\.
Access to credit is important for developing economies. 3\. Access to credit
doesn't imply predatory lending, that's a separate problem in how the creditor
runs their business.

~~~
beilabs
I'm not ignoring them at all.

I know that this service will be abused by those who need quick access to
capital and it will ruin many of their lives. I don't support payday lending
either, doesn't mean that it's illegal but it sure is unethical to charge high
interest rates on low sums.

~~~
kranner
Amazon has said this is rolling out (only) to "eligible customers", so it may
be restricted to the middle class.

The people that are facing starvation are not Amazon customers in the first
place; they are mostly migrant labour that doesn't have a fixed address, or
they live in remote areas where Amazon does not deliver.

Also, we don't know what the interest rates are, as yet.

------
kburman
As an Indian, I'm more scared with FB now getting our financial data.

~~~
rudiv
I've said it before, I'll say it again. And I mean it only 40% facetiously.

Facebook + Jio = Skynet.

~~~
john_minsk
Skynet from the movie? It was military AI. Not sure how these are related.

------
krtkush
The general risk profile of people is increasing due to job loss in the
current pandemic. Is it a wise time to launch a money lending feature right
now?

I'm a noob at economics so please ELI5.

~~~
netsharc
If I were an investor I'd be worried... from a humanity point of view, I'm
cheering this, in the developing world the governments aren't helping enough
(some would argue, "It's the same in the developed world!") and day-wagers are
probably going to starve to death[1]. A sudden line of credit would be a boon
to help them survive.

But since a capitalist came up with this, it would not surprise me if the loan
terms are horrendous and basically means they will be loansharks with slaves
trying to pay off the loan in the future.

[1] [https://www.theguardian.com/world/2020/apr/04/i-just-want-
to...](https://www.theguardian.com/world/2020/apr/04/i-just-want-to-go-home-
the-desperate-millions-hit-by-modis-brutal-lockdown)

~~~
beilabs
>> day-wagers are probably going to starve to death[1]. A sudden line of
credit would be a boon to help them survive.

If day wagers stay out of work how can they possibly earn the money or
interest required to pay the short term loan? Most day wagers have already
exhausted their savings. Debt on top of debt usually means starvation in these
countries.

~~~
netsharc
Well, a humane billionaire would just set very low interest and repayment
terms of "when you can". In the end it would just be no different to charity.
I wonder what's better, donating to the Indian version of food banks, or
giving them money so they can buy food.

There are (were?) already microcredit websites where people in the developing
world place loan requests like "I need a $500 loan to start a little shop",
and a bit like Kickstarter, you can give them the loan, but also you accept
this shop idea might not work and they would default on their loans -- and the
site tells you this, so from your point of view the loan would become charity.

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throwaway77384
The headline is actually: "WhatsApp eyes lending feature in India as Amazon
rolls out Pay Later to tens of thousands of customers"

Not sure whether this should be amended?

~~~
saagarjha
It probably didn’t fit in the character limit and needs a bit of editing.

~~~
jmsflknr
Yeah, not the fault of the person who submitted the story, which is fairly
informative. I'm assuming one of the moderators would fix it when they see it.

~~~
throwaway77384
Yup, never meant this to come across as assigning a 'fault', was just pointing
it out, as I was interested in the headline and then suddenly it stopped ;)

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nromiun
How much companies have actually lost in these schemes? Flipkart has been
doing it for years now.

------
sand_castles
What happens if people don't pay ?

Do they fly in people with guns from California ?

The problem was never access to credit, but access to high income jobs.

~~~
rapsey
They hand it over to a local debt collector agency or whatever the local
procedures are. Maybe they call the bank and take it out of the persons next
pay check.

I disagree that it is a jobs issue. It is a legal issue and what procedures
exist for these situations.

------
cryptica
The idea of lending in our current financial system is stupid. Just stupid.

It's like investing in a business except with almost all of the downside if
they do poorly and very limited upside if they do well. It's a deceptive
economic tool for social control, that's all it is.

The economy would be way better off if we just illegalized lending. Especially
lending by banks.

~~~
Rainymood
How would you be able to afford a mortgage?

~~~
cryptica
I'm a millenial. I already can't afford a mortgage. How will that change
anything?

But if they ban lending, it would cut demand to buy properties and would cause
a price crash. Then within 5 years, I would be able to buy a house with cash.

