How Does WhatsApp Make Money: New Revenue Model of WhatsApp

WhatsApp, the massive global messaging platform, boasts about 2 billion active users today.

Since its launch in 2009, many users have marveled at the app’s user-friendly interface.

WhatsApp has always been a free app.

It is well-known that its founders, Brian Acton, and Jan Koum, opposed using advertising or other traditional forms of monetization.

But how does a free app like WhatsApp generate revenue?

In this article, we will explore the various ways how does WhatsApp make money.

The History of WhatsApp

To understand how WhatsApp generates revenue now, we must first take a look at its founding and history.

Founders and Early Days

WhatsApp was founded in 2009 by Brian Acton and Jan Koum, both former Yahoo employees.

The app quickly gained popularity and here are two reasons behind it.

First, its user-friendly interface, and second the ability to send messages without incurring SMS charges.

In the early days, WhatsApp made money through a subscription model.

Users were charged $1 per year after their first year of using the app.

This approach was designed to keep the app ad-free and maintain user privacy.

In a blog post from 2012, Koum wrote that “advertisements are everywhere, and people are getting sick of them” and that the company was committed to staying ad-free.

Acquisition by Meta (formerly Facebook)

In 2014, Meta (then known as Facebook) acquired WhatsApp for a staggering $19 billion.

This acquisition not only integrated WhatsApp within the Facebook ecosystem but also shifted its monetization strategy.

Facebook removed the subscription fee in 2016, making the app entirely free for all users

How Does WhatsApp Make Money

You should go through the below sections in order to know in detail how WhatsApp earns money.

WhatsApp Business API and Customer Support

The primary source of revenue for WhatsApp comes from its WhatsApp Business API (Application Programming Interface).

This API was launched in 2018 basically for medium and larger companies to use as a direct communication channel with their customers

Here is WhatsApp revenue model through its Business API

API Charges

It operates on a pay-as-you-go model, where businesses using the WhatsApp Business API are charged on a per-message basis.

They pay a fee for each message they send to their customers.

Either as notifications or as part of a customer-initiated conversation.

The cost varies depending on the destination country and the number of messages sent.

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Session Messages

Session Messages are charged when a user initiates a conversation with a business, and there’s a 24-hour window where businesses can respond without any additional cost.

Once the 24-hour window has passed, businesses need to use Template Messages to continue the conversation.

Template Messages

Template Messages are pre-approved message templates that businesses can use to send notifications or engage with customers outside the 24-hour window.

These messages come with a cost, which again varies depending on the country and the volume of messages.

Customer Support Services

WhatsApp provides customer support tools to businesses that help them manage and respond to customer inquiries efficiently.

This includes features like automated responses, customer interactions, quick replies, and chatbot integration.

This can lead to better customer service, increased brand loyalty, and ultimately, increased spending on WhatsApp’s business services.

Verified Business Accounts(Upcoming)

To establish trust and authenticity, WhatsApp offers a verification process for businesses.

A verified business account displays a green checkmark badge next to its name, signaling that it is a legitimate and trustworthy entity.

While currently free, WhatsApp could potentially charge businesses for this verification service in the future.

WhatsApp Pay

WhatsApp Pay is an in-chat payment feature.

Users can make payments directly to the bank accounts of other WhatsApp users and non-WhatsApp users

It primarily generates revenue through transactions made by businesses.

Businesses are required to pay a fee of 3.99% per received transaction.

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On the other hand, individual users can send and request money without any additional charges.

This is how WhatsApp makes money from its WhatsApp pay while keeping the service free for individual users.

Ads in WhatsApp Status (Upcoming)

Recent reports suggest that the company will introduce advertisements through the Status feature, similar to Snapchat’s revenue-earning strategies.

This would allow businesses to use the Status feature, where text, photos, videos, and animated GIFs can be shared for 24 hours, to advertise and promote their products or services.

It is expected that the company will charge businesses based on various factors such as audience reach, geographic location, and ad format.

This new revenue stream could potentially generate significant income for WhatsApp.

Data Sharing with Facebook

As WhatsApp is now owned by Meta, it shares various types of data with Facebook, such as phone numbers, profile names, metadata, IP addresses, and information about user interactions with businesses.

This data helps Facebook identify which businesses users are interested in and tailor their advertising accordingly across its family of apps, including Instagram.

The exact amount of revenue generated through this data sharing is not publicly disclosed.

But it contributes to the overall advertising revenue of Facebook.

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