Facebook Jio Deal: A Perspective!

Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the ePanel discussions:

Mr. Saurabh Soni, Founder, and CEO at DigiSparsh
Mr. Raghu Veer Dendukuri, Founder, Ideal Nation and Solution Architect at Invincible Tech Systems Inc.
Mr. Kamonasish Aayush Mazumdar, Founder & CEO at Foodieverse
Ms. Tanya Naik, Director, Payments, PayPal Payments Private Limited
Mr. Sridhar R, former President & Credit Risk Officer, Lakshmi Vilas Bank
Mr. Rana Sinha Ray, Head Technology, TimesofMoney
Mr. Abhishek Arun, Senior Vice President, Paytm
Mr. Ishan Vaish, India Partnership Manager- Worldwide Developer Relations, Apple
Mr. Piush Kothari, Head of Business Operation, Walt Disney Direct to Consumer & International
Mr. Ajay B Panicker, CEO & Founder, NetPay Limited
Mr. Vishwas Patel, Director Infibeam Avenues Limited, Founder CCAvenue Payment Gateway
Mr. Shailesh Varudkar, VP – Global Business Operations, Vserv
Mr. Sharad Goklani, CTO at Equitas Small Finance Bank
Mr. Arun Tanksali, Co-founder & CTO, Nearex
Mr. Subbiaa Olimuthu, former Product Manager – Rupay Product
Mr. Shirsha Ghosh, Co-Founder Torit Innovations
Mr. Jaideep Pawar, Associate Director- Sales, Euronet Worldwide
Mr. Vikas R Panditrao, Co-Founder, Forum of Industry and Academic Knowledge Sharing (FIAKS)
Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum requested to remain anonymous

So this time the FIAKS Community raised several questions over this headline –“Facebook made 43,574 CR investment in Reliance Jio” ^[1]

Also, concurrent with the investment, Jio Platforms, Reliance Retail Limited, and WhatsApp has also entered into a commercial partnership agreement to further accelerate Reliance Retail’s New Commerce business on the JioMart platform using WhatsApp and to support small businesses on WhatsApp as WhatsApp already plays an important role in helping people and businesses connect in India. Reliance Retail’s New Commerce platform, JioMart, is being built in partnership with millions of small merchants and Kirana shops to empower them to better serve the needs of Indian consumers. The companies will work closely to ensure that consumers are able to access the nearest Kiranas who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp.

Question 1: Why does Reliance need Facebook to offer financial services in India? Chatting application like WhatsApp can easily be developed by any company for less than 1 million USD. Isn’t it? Is this MAKE IN INDIA?

Question 2: Also when Google Pay is allowed in India then why WhatsApp entry was restricted? Was this partnership only option left with Whatsapp to make an entry into India into payments space?

Question 3: Does this mean any chatting application like Viber, Telegram, etc can make 9.99% investment in payments bank and start offering financial services?

To answer this a member says, “Yes, they can, I suppose every bank could do that”
On the contrary, another member says, “Do u think Viber or Telegram or any other similar platform can bring financial input and also customer access? I don’t think so. Even today some of the big names in UPI based payments are agitated over what will happen to them if WhatsApp comes fully into India payment system.”

Now let’s evaluate the Jio-Facebook deal from the business perspective:

Win-win deal: Facebook got the billions for Reliance to reduce its debt. It’s a win-win for both parties. A ready and highly engaged consumer base for Jio and the capability to digitize all Indian small merchants’ payments and collections network for Facebook.
Larger Consumer Base: It seems a simple strategic move. It’s a two-way revenue planning where there is larger consumer base creation, in the name of Whatsapp users, and Jiomart platform as a marketplace, that is backed by Reliance as a brand.
A platform for Sellers: Sellers are always looking for mass selling opportunity on average, while some do personalized sales, in some industries, and especially for costly services. In the context of the former, this new marketplace will serve as another non-exclusive opportunity to gain more customers, and reasonably with the same or little more workforce. Any gain that these manufacturers will get will be considered as an increase in ROI. Also, to be noted here is that like in the case of physical stores, Jiomart might sell featured product blocks in every shopping category, for extra revenue, and most of the manufacturers & marketers buy the positions comfortably, based on slot cost and a potential increase in ROI. And while Jiomart is starting with groceries, an underserved segment, in the scope of online sales, the formula can be repeated with other segments in the future.
Competition: While they have Bigbasket and many other platforms, who deal groceries and a subset of supply from milk to rice to meat, this attempt by Jiomart, in partnership with Whatsapp, will be a deal saver, as there will be an opportunity for Jiomart to share deals, to assist with disputes, to increase consumption of Whatsapp for purposes, beyond existing in a rapid usage growth perspective, to connect Jiomoney and Whatsapp. (It is to be noted here that while Ratnadeep kind of local supermarkets, in Hyderabad, will have their customers, being WhatsApp users, many of them might surely try Jiomart, in next 3 to 5 months for sure, Jiomart is already promoting users to register for an Rs.3000 saving in purchases, while also tagging Whatsapp as a mode of assistance).
Increase in FDI: While an increase in FDI is welcomed, we now worry about the country of such companies, in terms of geopolitical equations and current corona crisis, and since these geopolitical situations may not remain same always, every country has to be careful, in terms of allowing FDI, on an industry basis, and likewise, norms in the scope of automatic route till 49% and manual route post that for government to have a check on FDI. These kinds of checks are not only for companies in a restricted list of countries, these kinds of checks have to be done for subsidiaries in different countries, of companies from the restricted countries list.