Google’s Sivanandan urged the local payment bodies to “find ways for payment players to make money” to ensure every stakeholder had incentives to operate. A recent directive from the government has now put an end to the cut they were receiving to facilitate UPI transactions between users and merchants. Mobile payment firms never levied any fee to users as a strategy to expand their reach in the country. Search for a business modelīut despite on-boarding more than a hundred million users, payment firms are struggling to cut their losses - let alone turn a profit.Īt an event in Bangalore late last year, Sajith Sivanandan, managing director and business head of Google Pay and Next Billion User Initiatives, said current local rules have forced Google Pay to operate in India without a clear business model. Overall, the platform has 300 million mobile wallet accounts and 55 million bank accounts, said Sharma. Paytm itself has amassed more than 150 million users who use it every year to make transactions. “After just three years, the annual run rate of transactions flowing through UPI is about 19% of India’s Gross Domestic Product, including 800 million monthly transactions valued at approximately $19 billion,” wrote Mark Isakowitz, Google’s vice president of Government Affairs and Public Policy. Federal Reserve implement a real-time payments platform such as UPI. In November, Google recommended (PDF) that the U.S. In August, the Federal Reserve proposed to develop a new inter-bank 24×7 real-time gross settlement service that would support faster payments in the country. And the company has found the UPI pipeline so fascinating that it has recommended similar infrastructure to be built in the U.S. The Google Pay app has amassed over 67 million monthly active users. Vice-president of Google’s Next Billion Users Caesar Sengupta speaks during the launch of the Google “Tez” mobile app for digital payments in New Delhi on Septem(Photo: Getty Images via AFP PHOTO / SAJJAD HUSSAIN) It’s interoperable,” said Kumar, who is now working at a startup called Setu to develop APIs to help small businesses easily accept digital payments. UPI does that, but it also enables peer-to-peer payments and across a wide-range of apps.
If you look at the western markets, digital payments have largely been focused on a person sending money to a merchant. “It all comes down to the problem it is solving. It has sustained its growth since, clocking 1.25 billion transactions in March - despite one of the nation’s largest banks going through a meltdown last month. In October, just three years after its inception, UPI had amassed 100 million users and processed over a billion transactions.
“If you look at UPI as a platform, we have never seen growth of this kind before,” Nikhil Kumar, who volunteered at a nonprofit organization to help develop the payments infrastructure, said in an interview. Indian fintech startups raised $2.74 billion last year, compared to 3.66 billion that their counterparts in China secured, according to research firm CBInsights.Īnd that bet in a market with more than half a billion internet users has already started to pay off. “Unlike China, we have given equal opportunities to both small and large domestic and foreign companies,” said Dilip Asbe, chief executive of NPCI, the payments body behind UPI.Īnd thus began the race to participate in the grand Indian experiment. With China keeping its doors largely closed for foreign firms, India, where many American giants have already poured billions of dollars to find their next billion users, it was a no-brainer call. In Pakistan, for instance, most people still run errands to neighborhood stores when they want to top up credit to make phone calls and access the internet.
For years, Google and the likes have attempted to change the purchasing behavior of people in many Asian and African markets, where they have amassed hundreds of millions of users. Silicon Valley companies quickly took notice. India then moved to work with a coalition of banks to develop the payments infrastructure that, unlike Paytm and MobiKwik’s earlier system, did not act as an intermediary “mobile wallet” to serve as an intermediary between users and their banks, but facilitated direct transaction between two users’ bank accounts. New Delhi’s abrupt move to invalidate much of the paper bills in the cash-dominated nation in late 2016 sent hundreds of millions of people to cash machines for months to follow.įor a handful of startups such as Paytm and MobiKwik, this cash crunch meant netting tens of millions of new users in a span of a few months.