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How Does WhatsApp Make Money? WhatsApp 2023 Revenue Models Explained

 

By Nerly Shammah Jun 16, 2023

 

It's unsurprising that many people wonder how the free and encrypted messaging app WhatsApp makes money. Well. , there are other ways to make money in the digital ecosystem without selling ad space and WhatsApp makes millions of dollars even while staying free, without ads and encrypted, learn how below.

 

 

One of the things to note is that WhatsApp hasn't always been a free messaging app, nor has it always been encrypted end-to-end, so alongside how WhatsApp makes money, we'll share some brief historical events that aided the transitioning of WhatsApp to a multinational free space for individuals and businesses to communicate. 

 

 

Understanding WhatsApp Revenue Models

 

After its acquisition in 2014 by Meta(formerly Facebook) for $19 billion, one of the largest acquisitions in the history of tech acquisitions and Meta's largest buyouts to date, the privacy-focused messaging application, WhatsApp, went through a series of business model changes and product offerings. Amongst these changes is the transition from its subscription-based business/revenue model to being a free-to-use messaging application.

 

Meta ditched subscriptions in 2016 due to its unsustainable realities as a primary monetization model when it announced in a blog post that WhatsApp would now be free. Following this, the company initiated plans to monetize the application with ads but faced some kickbacks on the reveal, it was at this time, precisely 2018 that WhatsApp co-founder and Facebook Inc. director Jan Koum announced his departure from Facebook, some reports suggest this was due to some disagreements over Meta's use of user data and its plans to run ads on WhatsApp. 

 

At the time of writing, WhatsApp still functions without ads and still supposedly prioritizes users' privacy so that begs the question: how does WhatsApp make money from its over 2 billion users while being practically free?

 

Here's WhatsApp Major Revenue Models:

 

● WhatsApp Business API 

● WhatsApp Pay

● Click-To-WhatsApp Ads

● Potentially selling user data(reports)

 

WhatsApp Business API

 

Although WhatsApp is free, WhatsApp Business comes with an entirely different product suite laced up to push as much as $900 million in revenue as per industry-wide reports. Not to get it twisted, most individuals can use the WhatsApp Business app entirely for free, but WhatsApp Business offers more for the above-average business or company. 

 

WhatsApp Business API is a product of the WhatsApp Business Plattform, what you need to understand here is that this is totally different from the regular use of the WhatsApp Business App. The business app is built with small businesses in mind, thus all activities or operations within this application are free, however, as a business grows larger, such a building environment becomes quite inefficient as handling user queries and services increases significantly. 

 

This is what the WhatsApp Business Platform is built for so that means there are two WhatsApp business products here:

 

The WhatsApp Business Platform is for medium to large businesses and The WhatsApp Business App is for small businesses. Getting the offerings of the WhatsApp Business Platform typically involves registering your business with WhatsApp here. 
 

That said, with this offering, WhatsApp generates revenues by charging businesses a fee to leverage their platforms to reach their customers. The fee structure is well thought out and developed in a fashion that lowers operational costs as the number of users serviced increases. The fee is levied on each conversation session a business has with its customers, this includes responding to queries from customers(typically referred to as "Service messages"), sending out marketing messages such as promos, related product suggestions, abandoned cart messages, also, utility messages that inform users about a post-purchase or transaction, for example, a message about a booked flight or some recurring billing statements. The last on the list would be authentication messages, for example, one-time passcodes to a number registering with a business, or to recover an account with a business or maybe to verify account activities such as logging into a service platform via a new and unknown device.

 

The rates at which WhatsApp charges these businesses depend on the region and the conversation category, typically, a service conversation is the cheapest amongst them in addition, WhatsApp offers free 1,000 service conversations monthly and also a free entry point conversation where businesses are not charged if a service conversation is open via a click to WhatsApp ad or a Facebook page call-to-action button in the first 24hrs. 

 

WhatsApp Pay

 

WhatsApp Pay is a p2p payment solution currently available only to individuals and businesses in Brazil and India, WhatsApp's two largest markets when it comes to users. Also, individuals can pay businesses in Singapore too. WhatsApp Pay is entirely free for users, however, businesses are charged a 3.99% fee on all transactions made to them via WhatsApp Pay. 

 

As such, WhatsApp makes additional money from its payment system, and while this may seem like a business side charge, it's important to note that most of the time when business operations costs are high, companies tend to increase their service and product prices to cover the cost, so while barely looking at the theories as to who is charged and who's not, users may actually be paying the charge via the orders sums paid. However, it is still important to note that users can still send money between themselves without a fee. 

 

Click-To-WhatsApp Ads 

 

Although this is mostly a Facebook-side revenue, it is important to note that since "WhatsApp" is the end business environment, the existence of it is, therefore, the reason these ads are placed in the first place, it becomes also closely tied to WhatsApp. 

 

With businesses looking to win users from Facebook to a more personalised business environment with lots of tools to woo individuals to become long-term buyers or consumers, WhatsApp makes money from businesses setting up these ads on Facebook in addition to all the above-mentioned revenue streams. 

 

Potentially Selling User Data(reports)

 

Like most companies under Meta and practically most digital businesses and companies that handle lots of user data, WhatsApp has been speculated to be involved in the sales of user data as part of its revenue streams. This is because with a user base that big, such data is highly valuable for businesses to build products and services tailored to the needs of the users and thus place targeted ads on these leads to convert to sales. 

 

Has WhatsApp Always Been Free and P2P Encrypted? 

 

The answer is NO! WhatsApp hasn't always been free, under the management of its founding bodies, the person of Brian Acton and Jan Koum, WhatsApp was a subscription-based messaging app where users had to typically pay a yearly sum of $1 to use the application. 

 

At the peak of this model, WhatsApp was estimated to be generating about $700 Million from its over 700 million users at the time. This model was found to be inefficient for long-term revenue by Facebook and was dropped. 

 

As per p2p encryptions, WhatsApp was always encrypted but not end-to-end or p2p. WhatsApp supposedly transitioned to end-to-end encryption in the wake of governments demanding that the company hand in its encryption key, to access user messages over the idea that terrorists used the app to communicate before and during attacks. 

 

This move makes WhatsApp messages only accessible by the sending and receiving parties that neither the government nor WhatsApp itself can access them, supposedly.