Walmart's PhonePe Surpasses Google Pay in India - UPI Transactions Soar

UPI, the payment infrastructure established by India’s leading banks four years ago, exceeded 2 billion transactions in the previous month, marking a significant milestone exactly one year after reaching 1 billion monthly transactions.

The increasing transaction volume on UPI – which has become the preferred method for digital payments in India due to its open architecture supporting interoperability between all connected payment applications – is largely driven by PhonePe, a Walmart company, alongside Google Pay, Paytm, and Amazon Pay.

“In contrast to the approach seen in China, we have provided equitable opportunities to both large and small companies, both domestic and international,” stated Dilip Asbe, CEO of NPCI, the organization overseeing UPI, in a previous discussion. The 2.07 billion UPI transactions recorded in October represented a total value of $51.9 billion, a rise from $25.7 billion in October 2019. Asbe has also indicated that NPCI is considering expanding UPI’s reach beyond India’s borders.

For the first time in over a year, Google Pay did not account for the highest number of UPI transactions. PhonePe reported 835 million UPI transactions in October, while Google Pay processed approximately 820 million, as indicated by sources with knowledge of the figures.

Paytm facilitated roughly 245 million transactions, and Amazon Pay completed around 125 million, according to the same sources.

PhonePe confirmed in a release that it had attained the “leading market position” with a market share exceeding 40% within the UPI system. Google did not provide an immediate response to a request for comment.

A Paytm representative informed TechCrunch, “Paytm provides its customers with a diverse range of funding options, including Paytm UPI, Paytm Wallet, Paytm Payments Bank accounts, debit cards, credit cards, and net banking. The total transactions utilizing these funding sources increased by over 20% in October.” The representative further noted that person-to-merchant (P2M) transactions account for more than 70% of the overall transaction volume.

TechCrunch was unable to ascertain the number of distinct monthly active users these payment companies have acquired within the country. In May, Google Pay had approximately 75 million active users, surpassing PhonePe’s 60 million and Paytm’s 30 million.

Unlike Google Pay, both Paytm and PhonePe also offer wallet services, which operate independently of UPI. PhonePe stated that it processed a total of 925 million transactions (UPI plus wallet) last month and currently has over 100 million monthly active users.

PhonePe has experienced a recent increase in transaction activity as more brick-and-mortar stores reopen and both merchants and consumers choose digital methods for completing transactions. The application has also incorporated a variety of financial services, including 600,000 insurance policies. PhonePe has also benefited from Flipkart’s festival sale and the expansion of the fantasy sports platform Dream 11.

“Our goal is to establish digital payments as an integral part of life for every Indian citizen, and we aim to exceed 500 million registered users by December 2022. Consistent with our brand philosophy of ‘Karte Ja. Badhte Ja.’ (Hindi for keep working and growing), we are continuously introducing new and innovative products for all segments of Indian society, and facilitating digital payment acceptance for every merchant in every village and town across India,” said Sameer Nigam, CEO and founder of PhonePe, in a statement.

As the market expands, some of the leading payment companies in India have encountered disagreements. In September, Google temporarily removed Paytm, India’s most valuable application, from the Play Store due to repeated violations of Play Store policies. Paytm asserted that Google’s Pay app engages in comparable practices and has since launched its own app store and formed an informal alliance with other prominent startups in India to reduce dependence on the Android developer.

Industry analysts have also suggested that Google Pay, like other popular payment apps in India, utilizes UPI payments to fund cashback rewards for users – a practice they believe helps Google increase the volume of UPI transactions processed through its application. India’s mobile payments market is projected to reach $1 trillion by 2023, as estimated by Credit Suisse.

However, these companies face additional challenges, particularly in achieving profitability from UPI transactions. During an event in Bangalore last year, Sajith Sivanandan, managing director and business head of Google Pay and Next Billion User Initiatives, explained that current regulations have compelled Google Pay to operate in India without a clearly defined business model.

The competitive landscape is expected to become even more crowded as additional players enter the market. WhatsApp, with over 400 million users in India, began testing UPI payments within its app in 2018. However, it remains entangled in a complex regulatory process, which has hindered the widespread rollout of WhatsApp Pay to its user base in the country.