How long can Google Pay and PhonePe sustain slowing growth of UPI?

UPI’s popularity, adoption, and influence on digital transaction in India is the result of the government’s aggressive move to bring a unified payment railroad for mobile-based payments. Since its inception in early 2016, UPI has recorded remarkable growth, outpacing other modes of peer-to-peer-payments and engrossing a shift in peer-to-merchant payments.

Seven months before the demonetisation, NPCI conducted a pilot with 21 member banks to launch one of the most influential products in the payments industry and as a result, 142 banks have joined the UPI ecosystem since its formal launch.

The credit for initial growth in adoption by several banks already has been attributed to demonitisation. However, the next set of growth was fueled when venture capital-backed payments companies like Paytm, PhonePe and later on Google Pay joined the UPI stack.

These companies observed that UPI is the best medium to popularise digital fund transfer. They used the proven formula of cashbacks to make a shift towards using UPI over other fund transfer methods such as IMPS and NEFT.

PhonePe and BHIM were the early evangelist of UPI stack followed by Paytm, MobiKwik, Freecharge, and others. It’s worth noting that currently – Paytm, PhonePe and Google Pay collectively drive more than 90% of UPI transaction.

On the other hand, because of its sheer simplicity and easy UX for transfers, UPI faced no friction in attracting already internet-friendly users as well as new users ripe for adopting electronic fund transfer post demonitisation.

Comprehensive comparison of UPI growth since 2018

NPCI’s foolproof planning before opening up UPI to masses can be testified with the product’s quick acceptance across cities irrespective of size and economic conditions.

To understand the growth of UPI, let’s compare the figures for H1-2018 (Jan to June) with H2-2018 (July to Dec) and H1-2019 (Jan to June).

In January 2018, UPI transaction volume stood at 151.8 million with a total value of Rs 15,571.20 crore. It recorded a 63% spike in volume and 162% rise in the value of the transaction as of June 2018.

Similarly, we can see collective growth between July 2018 to December 2018, the increase in volume and value recorded at 163% and 123% respectively.

 

Further in January 2019, the volume figure was recorded at 672.75 million transactions while the value of these transactions peaked to Rs 1,09,932.43 crore. This saw a mere 12% hike in volume and 33% rise in value as June 2019 was recorded at about 754.54 million transactions worth Rs 1,46,566.35 crore.

So, H1 2018 saw 63% and 162% increase in volume and value respectively whereas H2 2018 registered 163% and 123% increase in volume and value. The figure gradually becomes stagnant in H1 2019 as UPI recorded 12% and 33% rise in volume and value respectively.

Not only UPI, other electronic payments systems such as NEFT, RTGS, IMPS also saw a spike in transaction volume. Meanwhile, UPI had achieved a milestone of executing close to 800 million transactions in March and clocked Rs 1.5 trillion worth transaction for the first time in May 2019.

After Paytm, Google Pay leads the pack in UPI ecosystem

Paytm was claiming pole position in the UPI ecosystem till February this year. However, Google Pay and Flipkart-owned PhonePe have been scoring lead over the Alibaba-backed company ever since.

In May, Google Pay had recorded 240 million transactions amounting to Rs 55,000 crore whereas PhonePe and Paytm registered 230 million and 200 million transactions worth Rs 44,000 crore and Rs 38,200 crore respectively.

The next set of plans for UPI is doubling down on merchant payments as these have continually increased in the past few months – 15% in April to 31% in June. About 240 million merchant payments were processed via UPI in June 2019. For perspective, this volume is almost equal to Google Pay’s overall UPI transactions.

Entrackr has sent queries to NPCI requesting UPI-based merchant payments data. However, we’re yet to hear from the corporation.

BHIM losing plot

While overall UPI and private players market share increased tremendously, government-regulated BHIM has been losing its luster and barely processes 2% transactions in UPI ecosystem. Below graph shows that BHIM has been stuck at 15 million transaction for the past 6 months.

 

Lack of focus, promotion and anti-cashback thesis seems to have choked BHIM’s growth.

Has UPI reached its saturation point?

The fate of BHIM lies in the hands of the government and a further push isn’t likely given the presence of deep-pocketed private players. Likewise, UPI has also seen ups and downs in 2019. In a nutshell, UPI’s average growth in the last six months has been flat (except March and April).

This is because these numbers are closely dependent on Paytm, Google Pay, and PhonePe. It’s anticipated that this growth will slow down even further and is even slated to take a dip as Paytm is shifting its focus on merchant-based incentives.

“We will not drive promotions on UPI payments anymore as we can see that the user base has plateaued at 50 million,” Vijay Shekhar Sharma, the Founder, and CEO of Paytm said in an interview two weeks.ago

This will trigger downfall in transaction volume as well as value from Paytm’s side.

On the other hand, it will be worthwhile to watch for how long Google Pay and PhonePe drive the growth of UPI by throwing money on cashback. It’s likely that the trend of cashback is not going to subside as Google Pay would want to maintain its momentum and PhonePe is in conversation to raise a mega-round.

If PhonePe gets the round at a valuation it wants, cashback war would even be more fierce.

Further, saturation of UPI market is more a myth than reality considering there is still a vast market potential given how a large part of the Indian population is still devoid of this facility. It might be so that most of the current urban population using these applications has been onboarded on UPI, but a large factor still remains an unpenetrated market.

It may be too early to ascertain UPI’s future trajectory but looking at the recent info on BHIM as well as UPI itself, there is a need for improvement and incoming of more private players. The debut of deep-pocketed players such as Amazon Pay, Mi Pay, and a mass rollout of WhatsApp Pay would definitely bring new momentum to the UPI ecosystem.

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UPI battlefield: Google Pay beats Paytm and PhonePe at both value and volume

Surpassing all records in terms of UPI transaction volume and Value, Google Pay has dethroned its arch-rivals Paytm and PhonePe to become the largest contributor of NPCI-owned unified payment railroad.

The Google-owned payments app has recorded 240 million transactions amounting to Rs 55,000 crore in May whereas PhonePe and Paytm registered 230 million and 200 million transactions worth Rs 44,000 crore and Rs 38,200 crore respectively.

In the last three months, Google Pay has increased its adoption from 220-230 million monthly transactions to 240 million while PhonePe and Paytm have been gradually losing their marketshare.

In April, PhonePe recorded 258 million transactions, on the other hand, Google Pay and Paytm’s monthly UPI transaction stood between 230 million to 240 million.

Google Pay alone contributed over 32% in overall 733 million UPI transactions happened in May. Combinedly, these top three apps along with government-promoted BHIM count 93% of the UPI transactions market.

This is a big achievement for any offshore company that has achieved a user base of 45 million within 18 months of launch and fighting against incumbents like Alibaba-backed Paytm and Flipkart-owned PhonePe.

Currently, Google Pay is accepted at over 2,000 online merchants such as foodtech, travel, movie or event tickets, including trading, and investments. Besides, the firm has also forayed into wealth management space and collaborated with Pine Labs to boost its offline transaction.

Apart from peer-to-peer transaction, the firm is looking to compete PhonePe in terms of merchant payments that only contribute between 10% and 20% of the overall numbers.

In coming months, WhatsApp may launch its UPI-based payments service – WhatsApp Pay in India. With two overseas behemoths in UPI ecosystem, it would become more difficult for Paytm and PhonePe to compete against them.

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Source : https://entrackr.com/2019/06/google-pay-paytm-phonepe-upi-transaction-share/

Google Pay continues lead over Paytm and PhonePe in UPI transaction value

Google’s UPI-based payment app Google Pay has witnessed a remarkable growth ever since its launch in 2017 in India. In about 20 months, it has achieved a stellar growth giving its main rivals PhonePe and Paytm a run for their money.

According to transaction data of April, Google Pay did transactions worth Rs 49,700 crore way more than its competitors PhonePe and Paytm. PhonePe was at second number with a transaction value of Rs 42,610 crore whereas Paytm registered transactions worth Rs 35,500 crore.

All three together accounted for about 90% of the Rs 1.42 lakh crore worth transactionsreported last month. Govt-backed BHIM accounted for merely 15 million transactions worth Rs 6,600 crore during the same period.

This is almost 14% rise in Google Pay transactions in comparison to transactions value in March, as per Bloomberg report.

Interestingly, Google Pay recorded UPI transactions worth Rs 43,000-Rs 45,000 crore in March. Both PhonePe and Paytm are said to have done transactions worth Rs 31,000-32,000 crore each.

However, in terms of volume of transaction, PhonePe leads with 258 million transactions. Google Pay and Paytm are estimated to do transaction between 230 million to 240 million.

As per the last figure provided by Google Pay in March, it has about the user base of 45 million. PhonePe and Paytm have not revealed their exact user base. Earlier, in a tweet, Paytm founder Vijay Shekhar Sharma said there are about 94 million KYC wallets and 371 million total users on its platform.

Meanwhile, the actual numbers of active users and transactions volume are still unknown.

As per observers in the payment space, Google Pay chat enabled payment service is easy to use. And its promotional and cashback offerings have helped it attract more users in very less time.

Currently, Google Pay is accepted at over 2,000 online merchants such as foodtech, travel, movie or event tickets, including trading, and investments.

It has also been testing new products in wealth management space and collaborated with Pine Labs to boost its offline transaction.

As per Sensor Tower data, Google Pay had claimed a top slot in terms of downloads recorded by fintech apps globally. It was downloaded over 327 million times, with over 6X lead from second most downloaded fintech app.

In the last few months, global payer like Amazon has also been betting big to get major share in India payment space. With reports of WhatsApp Pay to be launched in about in next two months, the payment space in the country is poised to witness a dynamic change.

Who will be at forefront or winners in this payment battle, is a matter worth observing.

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Source: https://entrackr.com/2019/05/google-pay-lead-phonepe-paytm/

PhonePe seeks $8 billion value with $1 billion fund-raise

After Flipkart’s board gave approval to hive off PhonePe, paving the way for a solo fund-raise, the payments platform is in talks to raise about $1 billion from marquee investors like China’s Tencent and Tiger Global, three people aware of the development said.

Tencent and Tiger Global had backed Flipkart, which acquired PhonePe three years ago. However, the outcome of the talks would depend on the valuation at which these investors are willing to put money in the firm. PhonePe is looking at a valuation of at least $7-8 billion and will not take transaction forward at a lower level.

“Valuation can make or break these talks. PhonePe is in discussions with Tencent as it could leverage a strategic investor willing to back it for the long-term, especially to fight well capitalised Paytm,” a person aware of the discussions said. This person added it could take another two-three months for the investments talks to close formally.

For Walmart, which would remain a large shareholder in the case of new investors coming on-board, PhonePe’s valuation will be crucial since it bought a 77% stake in Flipkart for $16 billion, at a steep valuation of $22 billion. “Board will have to approve PhonePe’s valuation for the independent fund-raise,” the person mentioned above added.

This is not the first time PhonePe has explored independent funding as Nigam-led PhonePe had held talks for investments from strategic players like PayPal in 2017. Back then, too, valuation emerged as a deal-breaker and those talks did not result in an investment. However, the discussions with the new investors are more realistic to come through, sources added.

A PhonePe spokesperson did not respond to an email query by TOI. Tiger Global and Tencent did not respond to TOI’s queries either.

PhonePe, before Walmart acquired Flipkart, got a capital commitment of $500 million in late 2017. Little over half of this capital has been pumped into PhonePe, sources added.

While PhonePe has access to the rest of the capital pool committed by parent Flipkart, it needs new funds to feed its high-spend expansion spree that started in the past few months.

PhonePe has got well-capitalised rivals such as SoftBank and Alibaba-backed Paytm, Google Pay, which are fighting for local payments market. Impending entry of WhatsApp could put further pressure on PhonePe and its rivals. A person aware of the matter said PhonePe’s annual spend for 2019 is said to be in the range of $150-170 million. Its rival Paytm too is stitching up a deal that could see it raising $1-2 billion.

As PhonePe plans to continue its offline payments network expansion and enter new business-like wealth management and lending, it will be crucial that it has adequate capital to spend on existing and new businesses.

Google Pay most downloaded fintech app in 2018 globally, recorded 6X more install than PhonePe

Google Pay is the most popular digital payment app in the country. The Google-owned app was most overall downloaded fintech app last year as per Sensor Tower data. It was downloaded over 327 million times, with over 6X lead from second most downloaded fintech app.

PhonePe, at the second spot, got about 49 million installs. It’s worth noting that Paytm has been the most popular payments app. However, owing to Paytm Mall, Sensor Tower and Similarweb consider it in the shopping category, not in payments.

Both the apps (Google Pay and PhonePe) were also top most downloaded fintech apps on Google Play Store worldwide. They were followed by Alipay, Paypal, and Cash Back. The National Payment Corporation of India (NPCI) developed BHIM was at the eighth position on overall download and fifth on Google Play.

Google Pay sensor Tower

Google Pay has in last one year witnessed a phenomenal growth in terms of a number of active users. From 25 million monthly active users (MAU) in September last year to 45 million MAU by March 2019, it has added the most number of users in the period.

In terms of UPI transactions, Google Pay has left behind its close competitors such as Phone Pe and Paytm.

In March, out of total UPI recorded transactions 800 million worth Rs 1,33,460,72 crore, Google Pay recorded UPI transactions worth Rs 43,000-Rs 45,000 crore. Whereas its rivals did transactions worth below Rs 32,000 crore.

Google Pay’s average transaction value (ATV) is higher by 50 % compared to PhonePe and Paytm.

Google-owned firm has become a preferred app for merchants. As per a report by Razorpay, Google Pay accounted for 54% of merchant transactions, which is 8 percent lesser than last year figure, on its platform.

Meanwhile, Similar Web Data also had almost similar ranking for fintech apps downloaded on Google Play Store. Google Pay and Phone Pe were top fintech apps. BHIM was at ninth place.

The rapid growth of private players has made a huge dent on government-regulated BHIM. In the last two years, the BHIM app has lost its market share. It processed about 1.9% of all UPI transactions and accounted for 4.6% of the amount transacted in April. The number of transactions on the BHIM UPI app was 15.2 million for the month of April.

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Source : https://entrackr.com/2019/05/google-pay-most-downloaded-fintech-app/

Google Pay is ahead of Paytm and PhonePe in UPI transaction value

Grabbing the lion’s share of UPI transaction has become imperative and priority for Paytm, PhonePe, Google Pay, BHIM and other UPI-enabled payments apps.

While government-promoted BHIM has not been able to take off, private players have grabbed the opportunity with freebies, discounts, and other luring features to gather more UPI transactions on their platform.

Early adopters like PhonePe and Paytm have been maintaining their mojo until tech giant’s Google UPI app – Google Pay silently started to eat up their market share with a new avatar (previously, it was known as Tez).

Up from 25 million monthly active users in September 2018 to 45 million monthly active users in March 2019, Google Pay is now neck to neck with Paytm and PhonePe’s volume with around 225 million UPI transaction.

In February, media reports suggested that PhonePe and Google Pay were doing around 220 million transactions each while Paytm was leading the pack with 225 million transactions.

Interestingly, Google Pay recorded UPI transactions worth Rs 43,000-Rs 45,000 crore in March. On the contrary, PhonePe and Paytm are said to have done transactions worth Rs 31,000-32,000 crore each.

An ET report also added that PhonePe is marginally ahead of Paytm in terms of the value of transactions.

This essentially means Google Pay is quite close to Paytm in terms of volume and way ahead of the Alibaba-backed company in terms of value.

Google in its official statement also said that it hit $81 billion (or Rs 5.7 lakh crore) annualised transaction run-rate in March.

In terms of average transaction value, Google Pay’s ATV is higher by 50 per cent compared to PhonePe and Paytm. According to recent data revealed by BharatPe, Google’s Pay ATV hovers around $4.6 while PhonePe and Paytm recorded their ATV as $2.6 and $2.4 respectively.

Till date, Google Pay is accepted at over 2,000 online merchants such as foodtech, travel, movie/event tickets, and even trading and investments. To gather more users, the tech giant is reportedly spending $12-15 million on a monthly basis.

Apart from P2P transfer and retail payments, Google Pay is also targeting its arch rivals through wealth management products like digital gold buying. It may enter into a full stack wealth management business and integrate other payments use cases to drive more transactions and build loyalty amongst customers.

Of late, Google has partnered with Pine Labs to boost its offline transaction where PhonePe is the market leader. The collaboration with Pine Labs will give access to over 3,30,000 point-of-sale terminals in over 3000 towns.

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Source : https://entrackr.com/2019/04/google-pay-upi-transaction-march/

PhonePe is the first UPI app that can be used at Walmart India’s B2B stores

Walmart India and Flipkart-owned PhonePe on Monday said they had entered into a partnership to launch PhonePe as a payment option at Walmart India’s 23 Best Price Modern Wholesale ‘B2B Cash & Carry’ stores.

Phonepe to walmart

Walmart’s `Best Price’ stores cater to the needs of different business customers by providing relevant products and solutions to individual segments. These stores target resellers, including kiranas and electronic outlets along with offices, institutions, hotels, restaurants, and caterers.   

The new partnership will allow registered members of Walmart India’s ‘Best Price’ stores to leverage different payment options on the PhonePe app, including Unified Payments Interface (UPI), PhonePe wallet, third-party wallet, credit and debit card.

This partnership makes UPI payments available for the first time at Best Price Cash & Carry stores.   Further, the collaboration will not be limited to Walmart India’s stores, but also extend to the retailer’s Best Price online platform and assisted-ordering solutions.

According to PhonePe, this collaboration with Walmart India is expected to accelerate the payment platform’s adoption by kiranas and other small businesses.The company has been aggressively pushing for offline adoption of its platform, since mid-last year.

Announcing the launch, Krish Iyer, President and CEO, Walmart India, said,

“This initiative reiterates our commitment to help kiranas and other small businesses to prosper. The PhonePe payment system will further help our members streamline their business processes. By using PhonePe in our B2B cash-and-carry stores, our members are contributing to India’s growth as an efficient digital economy.”

Commenting on the partnership, Sameer Nigam, CEO and Founder, PhonePe, said,

“We have been working closely with the Walmart India team to deepen our ties, and the launch of PhonePe’s payment solutions in Best Price Stores and on www.bestprice.in, the B2B ecommerce platform, is a step in that direction. With this partnership, we will be able to help these businesses digitise all their payment transactions – from taking payments from consumers to paying at Best Price Stores for their own purchases.”

In October last year, Walmart India said the company would invest close to $500 million to open another 47 stores by 2022, taking the total number of outlets to 70.

A move long due?

PhonePe is a subsidiary of Indian ecommerce behemoth Flipkart, which was acquired by Walmart Inc in May last year. The payments platform first dropped hints of the partnership after the Flipkart acquisition.

“…I would be excited to see whether there are opportunities in the offline space where we can accelerate our offline vision. Walmart has a strong focus to bring digitisation for kirana and offline stores, which are a part of its cash-and-carry network. In that, I would be excited to see if there are synergies being explored with PhonePe for digital payments and solutions in the digital space.”

PhonePe was the first financial platform to be acquired by Walmart Inc., which already has a digital payment arm, Walmart Pay.

This means that the retail giant is still learning about digital payments in the country. In an earlier interview, Rahul also added,

“Well, Walmart is learning a lot about payments through PhonePe, and they are excited about the approach and growth we have shown. We are talking, and they have been open to learning more and more about payments.”

Over the last two quarters, PhonePe has been aggressively working to launch newer offerings on its platform. In November last year, the company launched its wealth management platform, PhonePe Wealth Services Pvt. Ltd.

The company is looking to release tailored products around mutual funds and insurance on its platform, in the next six months.  It is also building its CRM solution, the PhonePe for Business app, which will allow offline merchants to get a digital view of their earnings and, in the future, even allow them to avail of other services, like credit and insurance.

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Source : https://yourstory.com/2019/02/phonepe-first-upi-app-walmart-india-9ogdoin8h8?__sta=jo.mdhqvshbxb.nqsbsocsf%7CBYJ&__stm_medium=email&__stm_source=smartech