UPI game gets hotter as Google Pay and PhonePe vie for market share

UPI game gets hotter as Google Pay and PhonePe vie for market share

With Google pay and PhonePe now looking at a more or less equal market share of nearly 40 per cent on an average, PhonePe is stepping on the gas to take on Google Pay

Rukmini Rao | August 17, 2020 | Updated 20:52 IST
In July of 2020 the total transactions stood at 1.49 crore while the value of transaction was Rs 2.91 lakh crore.

Unified Payments Interface (UPI) payments may well be considered as the biggest fintech revolution in India so far, drawing global interests and accolades. With demonetisation being the biggest trigger for non-cash transactions, UPI transactions have almost doubled in both volumes and value over the last one year. However, the non-wallet market in India currently is dominated by Walmart-backed PhonePe and Google's Google Pay ."It's a dead heat between us and Google Pay right now," said Sameer Nigam, founder &CEO, PhonePe .

According to the data by National Payments Corporation of India in July 2019, the UPI transaction stood at 82.23 crore with the value of transactions nearly being 1.46 lakh crore. While in July of 2020 the total transactions stood at 1.49 crore while the value of transaction was Rs 2.91 lakh crore. With Google pay and PhonePe now looking at a more or less equal market share of nearly 40 per cent on an average, PhonePe is stepping on the gas to take on Google Pay. "We entered COVID-19 with 11 million merchants having substantial presence over 500,000 cities now," said Nigam. The company  also struck a few partnerships with some of government agencies and telecom operators. "We were looking to get to 20 million merchants by 2020-end; realistically we may reach 15-16 million merchants. We are not going to stop," he added.

Industry analysts say Google Pay's rapid market share gain has largely been due to the cash backs and other dole outs for users. PhonePe on the other hand said the total cash back over the last seven months since January has been less than what an average cash back spend would have been for a month. "We stopped discounts/cash backs since Diwali last year," said Nigam. "With monthly repeat rate of customers being 97-98 per cent, I don't need to spend a penny on this because customers find value in better security and success rate. Ultimately that's what that can play out anywhere."

PhonePe currently has around 23 crore-plus users and the monthly active users stand at around 9 crore. The company has also bolstered its financial services portfolio by launching six insurance and mutual fund products over the past four months with mutual fund investments coming from over 15,000 pin codes across tier-1,2 and 3 cities and towns.

However, what could be a bigger concern for payment companies  is NPCI is mulling over putting a cap on UPI transactions to de-risk the payment market from being skewed towards  two or three large players. (An e-mail seeking clarity on the payment cap to NPCI remained unanswered till publishing of this article and will be updated upon response.)