WhatsApp is particularly popular among friends and family who live in different parts of the world, enabling them to stay in constant touch thanks to its free messaging and calls.
How do they keep going when billions of users use its free service? Find out below.
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What does WhatsApp do?
WhatsApp is a communication platform and free app that enables users to send text, audio, and video messages. Users can chat with individuals or create groups to keep in touch. Important messages can be labeled with stars for future reference.
Content shared on WhatsApp is secured with end-to-end encryption, so they are not easily intercepted. As a result, only the senders and intended recipients can see them.
WhatsApp Business, offered as a free download, was built for small business users. It can create catalogs for products and services and comes with automated tools, such as welcome messages, sorting, labeling, and groups. These help businesses connect with their customers easily and respond quickly to customer queries.
WhatsApp Business can also be a handy tool for medium and large businesses to improve customer service and deliver urgent and important notifications.
How does WhatsApp work?
To use WhatsApp, you need a mobile telephone number with a SIM card. You can begin using the platform once you have registered that number and downloaded the app on a smartphone.
WhatsApp supports multi-device use for Android, iPhone, and Mac or Windows PCs. Users can access their accounts on more than one mobile phone and on a PC or laptop with WhatsApp Web. You must, however, use your phone to set up the web access. Users do not need a third-party application to use WhatsApp across multiple devices.
In addition to messaging, WhatsApp also enables users to create inclusive groups with whom they can share messages. Others can respond to the messages in a WhatsApp group by commenting or using emojis.
Many families, neighborhoods, schools, religious institutions, businesses, and local and central government institutions worldwide resorted to using WhatsApp to keep in touch and inform their members during the COVID-19 pandemic shutdowns. Many of them still continue using WhatsApp.
How WhatsApp makes money
WhatsApp makes money through fees on its Business API product and transaction fees on WhatsApp Pay, its payment platform. Larger businesses can use WhatsApp's API to support the automation of their support and sales processes.
WhatsApp revenues are on a solid growth trend. It received a significant boost during the COVID-19 pandemic, resulting in 2020 sales revenues of $5.5 billion, recording a 140% increase over the $2.3 billion earned in 2019.
WhatsApp Business Platform
Created especially for medium to large businesses, the WhatsApp Business Platform supports communicating with customers at scale via programmatic access. The WhatsApp API offers two ways for businesses to connect with customers.
- Respond to customer-initiated messages. Businesses can use channels off of WhatsApp to drive organic awareness—about the business WhatsApp number, website, storefront, and customer mailings/brochures. It is also possible to use paid awareness channels like Click to WhatsApp. This lets customers initiate a conversation by sending a message to your business. Read receipts enable businesses to measure message engagement by recipients. When reaching out is easy as sending a text message to a friend, customers can become better engaged, providing valuable input and feedback to businesses.
- Reaching out to customers with business-initiated messages. Depending on what stage of the buyer journey each customer is on, those businesses who have secured a customer's opt-in can initiate communicating with those customers on WhatsApp. Such messages can be created with customizable message templates, which come in text-based, media-based, and interactive formats.
The two types of conversations on the WhatsApp Business Platform: user-initiated and business-initiated. Each type is charged at a different rate.
- User-initiated conversations are those that initiate in response to a user message. When a business replies to a user within the 24-hour customer service window, that message will be associated with a user-initiated conversation. Companies can send free-form messages within this 24-hour customer service window.
- Business-initiated conversations are messages from a business sending a message to a user outside the 24-hour customer service window. These business-initiated conversations will require a message template.
WhatsApp Business users get 1,000 free conversations monthly, and rates are given per 24-hour conversation sessions. In addition, those conversations are free when someone messages a business directly from an ad that clicks to WhatsApp or via a call-to-action on a Facebook Page.
WhatsApp pricing also varies by geographic region and currencies and is given for cost per conversation, whether business or user-initiated.
WhatsApp Pay transaction fees are another revenue stream for WhatsApp.
WhatsApp Pay's payment system is similar to Facebook Pay and Google Pay platforms. It provides a convenient way to make instant money transfers to friends and family. However, the WhatsApp Pay service is available only for banks that support Universal Payments Interface (UPI).
Although the WhatsApp Pay payment feature is being made available in many countries worldwide, people in the US cannot send or receive money with WhatsApp Pay.
Future growth engine
WhatsApp's revenues come from fees on its Business API product and transaction fees on WhatsApp Pay. Larger businesses can use WhatsApp's API to support the automation of their support and sales processes.
Increasing the user base of the Business API is one way for WhatsApp to grow its transaction fee revenue stream. However, extending the uses and benefits of the Business API into a broader range of business applications is also a strategy. It appears that WhatsApp is doing both.
WhatsApp believes their WhatsApp Business API "can play a critical role in accelerating financial inclusion, education, skilling, and health services to the underserved.”
In India, for example, pilot projects are underway to allow people anywhere around the country to discover and decide on buying micro-pensions and health insurance; for connecting with government services and gaining access to their bank on WhatsApp.
WhatsApp alternatives and competitors include Facebook Messenger, Google Hangouts, Signal, Facetime, Telegram, IMO, and Viber.
Facebook Messenger is a free mobile messaging app for instant messaging and sharing content in image, video, and audio formats. In addition, Messenger facilitates group chats and can be used to make audio recordings. It is developed by Meta Platforms, formerly Facebook, which also owns WhatsApp.
Signal is a privacy-focused, free messaging and voice talk app that can be used with Apple and Android smartphones and on desktops. To join Signal, like WhatsApp, you need a phone number. However, you can text on Signal and make one-on-one or group voice and video calls. It also has emojis and stickers to make user engagement more meaningful and interesting.
Signal's privacy focus goes beyond mere end-to-end encryption. For example, messages on Signal can be set to disappear after defined timeframes, a feature that WhatsApp has also adopted. In addition, Signal collects virtually no data on users, a far cry from Meta businesses like Facebook and WhatsApp.