The Indian government can thank Google for the popularity of its digital payment system

Google Pay gaining ground.
Google Pay gaining ground.
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Google Pay is winning the race in enabling digital payments powered by India’s state-run platform.

The real-time payments app powered 59.75% of all United Payments Interface (UPI) transactions logged in August 2019, much higher than Flipkart-owned PhonePe’s 24.91% and Paytm’s 5.93%, show data from Razorpay, a Gurugram-based payment gateway.

Google Pay’s lead comes on the back of a 14.6% month-on-month growth in its UPI transaction volumes. In contrast, the government’s own BHIM app witnessed a decline in the number of UPI transactions in August.

A Paytm spokesperson, however, said RazorPay’s numbers don’t reflect the market trend: “The numbers…are based on transactions recorded on their (RazorPay’s) platform and is not a true representation of the market, especially in acquiring customers on UPI platform. Paytm is already the largest UPI acquirer in the country.”

Closing the gap

UPI was launched three years ago by the state-owned National Payments Corporation of India (NPCI), the umbrella organisation that manages most digital payments in the country. It is now fast closing the gap with cards, which remains the leading payments mode in the country, according to Razorpay’s analysis.

UPI had a 40.78% share of all payments made India in August. Cards, on the other hand, accounted for 44.1% of payments in the month.

“Transactions for August indicate how UPI could soon be a stepping stone for sustainable growth for an interoperable digital payments ecosystem,” said Harshil Mathur, CEO and co-founder, Razorpay.

What’s encouraging is that UPI transactions grew 12.87% in August compared to a decline of 3.26% in the previous month.

Small by value

Yet, UPI still lags behind other modes in terms of average transaction value, as it is yet to find favour with consumers for high-ticket payments.

“Customers are clinging to old ways of making large value transactions because they are used to it, or they are concerned about the security in UPI transactions,” said Mathur.

Regional-uptake of UPI

Tier 1 cities such as Bengaluru, Hyderabad, Mumbai, and Chennai are powering the digital economy. Together, these cities, accounted for 66.43% of UPI transactions in the country in August.

Further, Karnataka, Maharashtra and Andhra Pradesh states command a lion’s share of all UPI transactions. “Karnataka has been pushing the right buttons encouraging adoption of digital transactions. The southern state is the numero-uno in UPI transactions,” said Mathur.

IT hub Bengaluru lives up to its name as India’s Silicon Valley, accounting for 40.06% of all UPI transactions. The next big adopters of digital payments are Hyderabad and Pune with a share of 11.9% and 8.7%, respectively.