Days after the announcement of Indian fintech entrepreneur Kunal Shah as its new global head, Meta-owned WhatsApp has found itself entangled in a major controversy, which the instant messaging platform may not have seen coming. ’s move to introduce usernames, which users can use instead of their registered mobile numbers for communication, has run afoul of the government and cybersecurity experts in its biggest market.
Even before the rollout began, the Indian government asked WhatsApp to freeze the process until consultations on the issue are completed “to the satisfaction of the Government”. It has also directed Meta to furnish a detailed explanation on the username feature, backed by relevant documents, within three days.
Addressing this would be ’s first major challenge as WhatsApp continues to struggle in making money from India, despite having over 500 million users in the country.
Why Meta chose Shah
The announcement of Shah as the new head of WhatsApp and Meta’s $900 million investment in CRED came as a surprise to many. But many analysts soon pointed out that the 47-year-old fintech entrepreneur was the perfect candidate to lead WhatsApp as it eyes a larger chunk of India’s growing digital payments ecosystem.
Despite not being an engineer by qualification, Shah built two of the most successful fintech apps in India, Freecharge, which was sold to Snapdeal and later acquired by Axis Bank, and later CRED.
WhatsApp Pay ambition
WhatsApp, much like Elon Musk’s X, has been trying to evolve into a superapp, which also include payment services. WhatsApp launched its UPI-based payments in India in 2018, and despite its absolute dominance in the instant messaging scene, it failed to make any meaningful impact when it came to being a payments platform.
WhatsApp Pay trails market leaders (46.2%), Google Pay (32.7%), and Paytm (7.9%) by a distance and accounts for less than one per cent of India’s digital payments.
Industry executives say that by bringing Shah on board, Meta is trying to crack the code that it has so far failed to.
“If you look at where WhatsApp is right now, they are in a league of their own as far as messaging is concerned, and it remains an excellent tool for small businesses to discover commerce, but the leg which is broken is payments,” Siddarth Pai, founding partner at venture capital firm 3one4 Capital, told Reuters.
Shah’s experience developing consumer-facing payments products from scratch in India makes him a logical choice, Pai added.
Username battle
Following the government notice, WhatsApp has tried to reassure the Indian government that it has guardrails to protect against impersonations and scams.
In a statement, a WhatsApp spokesperson said they have announced the option for people to reserve their preferred username on the platform. “The ability to use a username is not yet live and will roll out slowly later this year. To protect against impersonation, we’ve held the highest-profile names — think public figures, government entities, celebrities, verified Meta accounts — so they can only ever be claimed by their legitimate owners and lookalike derivatives of known names are held as well,” the statement said.
“Users still require a phone number to use WhatsApp and we’ve built multiple layers of defence against scams into usernames: Other users need to know the exact username to message you, we will limit how many new people an account can contact, block repeated attempts to guess someone’s username key, and have systems to detect and remove activity showing common impersonation and abuse patterns,” the statement added.
The spokesperson said that when the feature becomes available and “someone sends you a message for the first time via your username, we will show you if they’re a new account, if they’re your contact, if you have groups in common, and if they’re based in a different country, so you can decide whether to respond”.
Core challenges for WhatsApp and Kunal Shah
WhatsApp was founded in 2009 and acquired by Facebook in 2014, and has always struggled to monetise its user base. WhatsApp’s main source of revenue is from business accounts that pay the platform for the ability to reach its users. But it has limited scalability and concerns over cross-platform data sharing with other Meta apps – Facebook and Instagram have time and again raised concerns about its claim of end-to-end encryption.
WhatsApp’s has also ran into trouble with the government as the Information Technology (IT) Rules demand that platforms must trace the “first originator” of flagged messages to curb misinformation and cybercrimes.
Due to its widespread use in India, WhatsApp has also been exploited by some actors for spreading fake news, hate speech, and large-scale digital scams, including ‘digital arrest’. WhatsApp has so far failed to address such concerns in a meaningful manner.
With Meta investing in CRED and Shah joining WhatsApp, many had also expressed concerns over data sharing between the two platforms. Addressing this, both companies have said that Meta will not have access to CRED customer data and that Meta will not hold a board seat in the fintech.