India's Hike Brings Mobile Payments to Its Messaging App

India's biggest local messaging app, Hike Ltd., has beaten Facebook Inc.'s WhatsApp into the country's booming mobile-payments business.

Hike on Tuesday launched free bank-to-bank and mobile-wallet payments for its roughly 100 million users, meaning people can quickly send money to one another via the company's smartphone app.

"We are the first to bring payments to a messaging app in India," Hike's founder and chief executive, Kavin Bharti Mittal, said at an event in New Delhi.

WhatsApp says that some 200 million of its 1.2 billion users are in India, making the South Asian nation its largest market. The company has been exploring adding digital payments in India, which would be its first such offering globally, and could give it a chance to take advantage of a growing trend in the world's last great untapped internet economy. A WhatsApp spokesman declined to comment on a potential time frame for when such a feature, if incorporated, could launch.

Hike-- which last year raised $175 million in a fundraising round led by Chinese internet company Tencent Holdings Ltd.--is the latest startup to tap into surging demand for cashless payments in India.

This year millions of Indian consumers, who historically have made most of their purchases in cash, have been leapfrogging credit cards and transacting on their smartphones for the first time. New Delhi in November moved to crack down on tax evasion and corruption by nullifying its largest-denominated notes, triggering a crash crunch and the rapid adoption of digital wallets.

The sector has caught the attention of global investors. India's largest mobile-payments startup, Paytm, which says it has 225 million mobile-wallet customers, last month raised $1.4 billion from Japan's SoftBank Group Corp.

To be sure, being the first to offer a new payment option may not be enough to help Hike amid intense competition, analysts say. Hike is likely to face a big battle for new users given WhatsApp's larger base and popular intuitive interface, said Neha Dharia, an analyst who studies messaging trends at telecommunications research firm Ovum.

"The biggest challenge that Hike faces is that their service is so much more complicated than WhatsApp," she said. "You have to be an educated digital user to use Hike."

The company may also be feeling pressure to monetize its offerings, Ms. Dharia said. It is unclear, however, how Hike's users might adopt its new payment features given competition from Paytm and other mobile-payment providers.

Hike says its service is meant to appeal to India's younger users with its stickers and a function to improve selfies, saying 90% of those on its platform are between the ages of 15 and 24.

Write to Newley Purnell at newley.purnell @wsj.com

(END) Dow Jones Newswires

June 20, 2017 07:47 ET (11:47 GMT)