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How Does WhatsApp Make Money? (Explained)

WhatsApp logo on the screen smartphone

 

There’s no shortage of instant messaging platforms available on the internet these days.

One of the most popular is WhatsApp.

A lot of people enjoy WhatsApp for its free features and ability to contact people in other countries without paying an extra fee.

However, because it’s a free instant messaging system, you may wonder how it manages to earn money.

Here’s what you need to know about WhatsApp and how it makes money.

 

How Does WhatsApp Make Money?

Man holding phone with Whatsapp

 

WhatsApp makes money through two different services it provides.

Those services are WhatsApp Business and WhatsApp Pay.

This wasn’t always the case, however.

Originally, WhatsApp had a freemium service.

Users were able to send messages for free for one year.

After that year, they had to pay a $0.99 annual fee to continue using WhatsApp.

That changed with the introduction of WhatsApp Business and WhatsApp Pay.

WhatsApp Business charges its users a certain fee per message.

The more messages the business sends, the lower the fee that they need to pay.

This encourages the business to use WhatsApp as much as possible to get to the lowest fee tier possible.

The other method it uses to generate money is WhatsApp Pay.

WhatsApp Pay is similar to PayPal in that it links to a bank.

You can then use the funds from your bank to send money to other people.

The people receiving the money have to pay a 3.99% fee to get the money.

WhatsApp gets its money from those fees.

Using these two methods allows WhatsApp to generate money without relying on other money-making methods like subscriptions, ads, or in-app purchases.

 

How Does WhatsApp Differ From Other Chat Services With Money Generation?

Whatsapp logo

 

WhatsApp makes money from WhatsApp Business and WhatsApp Pay.

This is different from many of the methods that other chat systems use.

Here are a few other chat systems and how they make their money versus how WhatsApp makes its money.

 

1. LINE

IPhone 5S with Line app

 

One of WhatsApp’s competitors is LINE.

LINE offers many of the same services that WhatsApp does.

You can call people, sit in voice and video chats with them, and send photos to one another.

LINE is also a freemium service like WhatsApp.

The way it makes money is a bit different, however.

LINE earns money through in-app purchases and ads.

There are various stickers that you can buy and send to your friends.

They’re similar to emojis except that they’re custom-made for LINE users.

While there are some free stickers that users can use and send to friends, some of the more detailed and fun ones cost money.

Each time someone makes an in-app purchase of a sticker or other item, LINE makes money.

This is different from WhatsApp because WhatsApp doesn’t have a store.

Using emojis is free on WhatsApp.

 

2. KakaoTalk

KakaoTalk app

 

Another major competitor to WhatsApp is KakaoTalk.

This messaging app got its start in South Korea but has since expanded well across the world in terms of users.

KakaoTalk does some things similar to WhatsApp.

You can use it to chat with other people and video call them, too, without burning data.

However, it also offers a few unique features that WhatsApp doesn’t have.

In particular, it has animated emojis that you can freely send to other people.

You can also completely customize your UI.

It has a group chat function that allows you to invite an endless number of participants.

It even has banking features, games, and maps that you can use.

The difference between KakaoTalk and WhatsApp, however, is how they generate money.

KakaoTalk earns money through advertisements.

Because it has games, it’s able to encourage its users to click on ads to watch them and receive a small reward for doing so.

In a game that uses energy to perform actions, for example, the reward might be some extra energy for that game.

Because it has a banking system, the app also earns money via fees associated with every transaction.

Like LINE, you’re also able to buy certain stickers and animated emojis.

KakaoTalk gets money from those purchases.

Finally, they also have a store where users can buy an assortment of things.

This is very different from WhatsApp which allows you to get everything for free.

You also don’t have to worry about viewing ads with WhatsApp.

If you’re using WhatsApp Pay, then you might find the service similar to KakaoTalk.

If you’re only using WhatsApp, however, then you get all of its features for free.

 

3. Kik

Cheerful young man chatting on smartphone

 

Kik does things a little differently than many other chat systems.

Although it is also an instant messaging app, it generates money in a unique way.

While it does offer stickers for sale, its primary focus is on its Kik Points.

Essentially, Kik rewards Kik Points to users when they perform certain functions on the app.

They can then use those points to unlock certain emojis and other rewards.

Users can also purchase Kik Points.

Kik has partnered with several brands to allow them to speak more directly to their consumers.

Kik calls these chats “promoted.”

A user can pay a certain fee to become part of the promoted chat.

It’s a unique form of advertising.

Kik is also looking to get into cryptocurrency.

It created its own digital currency which it calls Kin.

Kin uses the Ethereum blockchain as its source.

Although they’re still experimenting with Kin, Kik hopes to make its own chat-based economic ecosystem.

This is very different from WhatsApp which hasn’t dabbled in making its own currency yet.

That said, WhatsApp Business is similar to Kik’s Promoted Chat system.

 

4. Skype

Skype logo on tablet

 

A final competitor to WhatsApp is Skype.

For many people, Skype was the first real instant chat messaging platform.

It even was a lot of people’s first video call platform.

It offers the same sort of features as WhatsApp in terms of chatting and calling other people.

However, Skype has a different way of earning money.

Most of its services are free, but it does have two main ways that it earns money.

The first is by selling credits.

Users can buy credits from Skype to perform various functions like calling people on landlines.

It also allows them to send a chat message to anyone in the world.

Credits also enable users to buy a Skype number instead of using their own phone number to maximize privacy.

The other main method it uses to generate profit is a subscription service.

They call it Skype To Go.

Skype To Go enables people to make calls to others, especially in other countries, without the use of the internet.

It does so by providing them with a local phone number in the region that they want to contact.

This is ideal for business owners who may not be able to speak with partners because of a faulty internet connection.

As long as the user continues to subscribe to Skype To Go, they can use that service.

WhatsApp doesn’t offer anything like that.

As such, the two companies have very different methods of generating money.

 

When Did Facebook Buy WhatsApp?

Whatsapp

 

Depending on when you started using WhatsApp, you may have thought that Facebook always owned the chat app.

That isn’t the case.

WhatsApp first came online in 2009.

The creators were Brian Acton and Jan Koum.

They created WhatsApp for two main reasons.

The first was a response to the other expensive SMS apps that existed at the time.

They wanted a cheap messaging system that would allow practically anyone to use it.

The second thing is they wanted the messaging app to be private.

WhatsApp performed quite well for several years.

However, over time, Facebook had an interest in buying it.

They eventually decided to buy the company in 2014.

It cost them $19 billion to buy the service.

Koum and Acton remained part of WhatsApp for four years.

However, in 2018, they both decided to part ways in protest of the monetary system that Facebook wanted to implement.

In particular, they were against the selling of user data.

They wanted to maintain the privacy that WhatsApp users came to the app specifically for.

Generating and analyzing data from their users would likely drive many of its users away.

They also chose to part ways with Facebook and WhatsApp because Facebook wanted to use ads in the app.

The ads would be a way for the company to generate profits as well.

Since Facebook wanted to use targeted ads based on data, Koum and Acton weren’t happy about it.

They left and WhatsApp eventually shifted to using the monetary systems that it uses today to make a profit.

 

Is WhatsApp Private?

Man holding smartphone with Whatsapp logo

 

Because of its link to Facebook, many users may wonder if WhatsApp is actually private.

After all, Facebook came under fire not long ago for its collection and use of user data.

The good news is that WhatsApp uses end-to-end encryption.

This means that no one except for the sender and receiver of those messages can access the data.

Not even WhatsApp can access the data.

This was primarily done as a response to world governments requesting an encryption key that would allow them to gain access to the data.

The governments cited the use of chat apps by terrorists to recruit and organize attacks.

They wanted access to those messages to ensure they were able to hunt down key members of terrorist organizations.

WhatsApp refused and protected users’ data with end-to-end encryption to ensure no one but those involved in the message could get the data.

In this way, WhatsApp could ensure that all of its users had their privacy protected.

By allowing the government to have an encryption key, every user could potentially be subject to a probe by a government task force.

Because it uses end-to-end encryption, WhatsApp is very private.

As to how safe it is, that usually falls to the user.

After all, if you fall for a scam and give someone your private information, then there’s no way that WhatsApp can protect against that.

As such, when speaking with strangers, it’s always a good idea to use extreme caution and refrain from giving away personal information.

 

What Is WhatsApp Business?

Whatsapp business app

 

If you’re a business owner looking to grow your business, then you may be curious about conversational commerce.

This is a growing trend that has seen a lot of positive feedback in the business world.

Conversational commerce essentially means that a business can provide a rich and satisfying experience to a customer through a chat service.

Because they’re able to respond quickly and accurately, the customer receives a positive experience from the exchange.

In return, they’re more likely to spend money at the business.

This is at the heart of most chat systems that allow businesses to create a profile or account with the system.

WhatsApp Business, for example, allows businesses to make an account that’s branded with their business’s name and logo.

This makes it easy for customers to know exactly who they’re talking with.

It’s different than using SMS because customers don’t always know who is speaking to them.

Instead of having a business name, they’re only seeing the phone number that the business is using to contact them.

In the world of scammers, people are less likely to answer or respond to a phone call or text message if it’s from a number that they don’t know.

As such, using WhatsApp allows businesses to reach their customers a lot more easily and effectively.

Here are some of the benefits of using WhatsApp Business.

 

1. Delivery Information

Businessman Using Mobile Phone

 

Businesses can generate small-scale data collection on those they interact with.

For example, WhatsApp allows businesses and everyone else to know when a message gets delivered and read.

This is essential for business owners because it helps them determine what messages are landing with their customers and which ones aren’t impacting their customers to take action.

It also helps them distinguish between computer errors and misguided ad attempts.

For example, if a customer doesn’t respond to a message sent by the business, then they might investigate why.

They may notice that their original message was never delivered.

They then know that it wasn’t the message that failed to connect to the consumer.

It was a problem with the internet connection or server when sending the message.

On the other hand, if they see a notification that the message did deliver successfully and the customer read it, then they can start to evaluate why the message didn’t encourage that customer to act.

This allows them to go back to the drawing board to create a new ad campaign.

The information that a business receives from delivery notifications can help them determine how to proceed with future ad campaigns.

 

2. Improved Customer Happiness

Happy young woman holding smartphone

 

Customers like to feel connected to the brands that they support.

In a world filled with connections, it’s easy for businesses to ensure their customers feel connected to them, too.

The best way to do that is by directly communicating with them via WhatsApp.

When a customer has a question or concern, WhatsApp allows them to message the company directly.

The business can have either paid employees on hand and ready to communicate with their customers, or they can use bots to answer some of the more frequently asked questions.

Because the customer is able to get a response quickly, this increases their happiness.

They don’t have to spend hours waiting for the business to answer.

In most cases, a customer will probably end up choosing another business that was able to respond to them faster.

By being able to resolve customer questions fast, businesses can strengthen their relationships with their customers through WhatsApp.

 

3. Sales Promotions

Sales Growth

 

Another great benefit that businesses will enjoy with WhatsApp is the ability to send ads and sales to their customers directly.

If the business can keep track of certain interests that the customer has, then they can send notifications about specific sales to their customers.

They can even use different trigger words that enable their customers to either continue to receive notifications about sales on that specific type of product or opt out.

Not only does this option ensure the customer stays happy, but it also means they’re able to target their sales a bit better.

Being able to promote sales through the messaging system means that they can make their customers aware of new sales immediately.

They also don’t have to spend a lot of money on advertising through the internet or on TV ads.

Businesses can reach their customers directly without much of a middleman taking away some of their marketing money.

This also means it’s easier for customers to become aware of sales.

Outside of WhatsApp, businesses have to rely on the fact that their customers will be watching TV at the exact moment an ad airs.

With WhatsApp, they can make their customers aware immediately.

This can then increase the chances of the customer purchasing something since it’s on sale.

 

4. Large User Base

WhatsApp mobile icon app on screen

 

A lot of businesses might be wary of using WhatsApp Business because they feel it might not be worth the investment.

That isn’t the case.

WhatsApp has a large user base.

It has more than two billion users spread across 180 countries.

Part of the reason it has so many users is the fact that WhatsApp comes preloaded on many new phones.

Since it’s already ready to use, customers don’t have to work hard to get on the app.

This means businesses don’t have to work hard to find an audience, either.

They also don’t have to work hard to convince people to leave other apps to join them on WhatsApp.

The chances are good that most of your audience is already using WhatsApp.

WhatsApp Business is beneficial because it already has a huge user base.

 

Conclusion

WhatsApp is a popular social messaging app that specializes in sending chats, video calls, voice calls, documents, and other files.

Most users will enjoy the free services that the chat provides.

However, WhatsApp Business and WhatsApp Pay are the primary forces earning the company money.


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