WhatsApp, the Facebook-owned messaging service, is to drop its token $1-a-year subscription to go fully free for every user, the company’s chief executive has announced.

Speaking at the DLD conference in Bavaria, Jan Koum confirmed that the $0.99 annual fee will be scrapped, effective immediately. Previously, WhatsApp had been free for the first year, with the fee charged for every subsequent year. Long-term users of the iOS version were given free use for life, as a thanks for paying a fee to download the app when it had a one-off charge.

The company will instead try to earn revenue by monetising communication between businesses and individuals – but Koum also said that the beneficence of WhatsApp’s parent company, Facebook, means that earning revenue is not the top priority.

In a blogpost, WhatsApp said: “People might wonder how we plan to keep WhatsApp running without subscription fees and if today’s announcement means we’re introducing third-party ads. The answer is no.

“Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organisations that you want to hear from.

“That could mean communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight. We all get these messages elsewhere today – through text messages and phone calls – so we want to test new tools to make this easier to do on WhatsApp, while still giving you an experience without third-party ads and spam.”

Although the fee is small, WhatsApp says it has harmed its growth, particularly in developing nations where access to banking systems is tenuous. Users without a debit or credit card find it hard to pay the fee even if they can afford it, the company says, “and they worried they’d lose access to their friends and family after their first year”.

Penetration into those markets is key for Facebook, which purchased WhatsApp in 2014 for $19bn. Facebook’s own-brand messenger service, the imaginatively named Messenger, has strong penetration in Western markets, particularly in the US, but WhatsApp leads the way in developing nations including Brazil, Indonesia and South Africa.

The two services are very different in appearance, with WhatsApp aping old-school SMS messaging as Messenger hews more to the design cues of an instant messaging service. Those differences lend to different strengths, with Messenger working better in nations with good data connectivity and a strong desire for rich-media. WhatsApp, by contrast, has achieved much of its success by appealing to price-sensitive consumers who want to avoid paying a fee for every text-message sent.