Facebook announced on Thursday that it will start charging merchants for the use of its WhatsApp Business chat services. The social media giant will now offer in-app purchases as well as hosting services that will enable businesses to sell products within WhatsApp through Facebook Shops. The new feature can now enable consumers to purchase directly from a chat.
While WhatsApp Business enjoys more than 50 million users, Facebook has been struggling to generate meaningful revenue from WhatsApp. The messaging app was acquired by Facebook for £12.3 million in 2014 but mainly relies on advertising in Facebook and Instagram to generate income.
WhatsApp is one of Facebook's acquisitions that has been under close scrutiny by the House of Judiciary subcommittee on antitrust as it shows that it strongly holds a monopoly power in social networking.
According to CNBC, Facebook charges businesses when it sends certain messages to customers such as product receipts or boarding passes. Although it has not yet provided any clear details as to how it plans to charge for its additional services and how much it will cost, they are intent on changing how merchants will be charged. The service cost varies on the market and the quantity of the messages that have been sent.
Customers will be able to utilise the in-chat shopping feature which allows businesses to add call to action 'buy' buttons and will redirect customers to the merchant's chat to complete their purchases.
Matt Idema, WhatsApp's chief operating officer, said the shopping tool will officially start this year, while its message hosting services will be available in 2021.
WhatsApp plans to offer the hosting service for free to try and entice new paying customers to its shopping tools.
Idema said allowing merchants to use WhatsApp's API gives them a better leverage to manage message threads outside of the app. This also provides them a place to store conversations for future transaction reference. However, chats with a business using the new hosting service will not be protected by the app's end-to-end encryption.
On the other hand, Facebook has also said it will not use message data hosted on its servers for other business purposes.