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Created April 23, 2019 07:55
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Why I believe Google Pay is ahead of Paytm and PhonePe in the UPI race

Recent reports have indicated that all three major UPI apps - Paytm, PhonePe & Google Pay have been contributing significantly to the growth of the app. A million dollar question is: who is leading the race! Paytm seems to have an edge over the other two albeit with a thin margin. However, I would like to evaluate it with more context. Paytm and PhonePe have been doing much more than just facilitate P2P and P2M UPI transactions. For context, here are some of the key things that PhonePe and Paytm have been doing to drive greater volume of UPI transactions:


1) Flipkart / Myntra contribution

Significant number of transactions originating in Flipkart & Myntra are handled by PhonePe as they all belong to the same group of companies. GooglePay or other UPI options don’t get any preferential treatment by these two mega e-commerce companies.

2) Offline contribution

PhonePe has been a quick follower in the offline QR acquiring space. It is the credible alternative (as of now) to Paytm wallet and their traction in the offline space has been tremendous. The key transaction drivers here are Mother Diary, HPCL fuel stations. It also helps that PhonePe offers great cash backs for customers to encourage them to transact in small values.

3) Micro apps

Following the WeChat route of micro apps, PhonePe has provided space for other apps in their canvas. Popular apps in the PhonePe garden are Ola, Redbus, Domino’s, Grofers, etc.. PhonePe would also be driving a significant number of transactions via these effective cross-sells.


1) Cashbacks

Paytm has been the Cashback King in India. They have grown tremendously by adopting this formula to drive transactions. The effect of this is so great that a typical customer expects Cashback for most e-commerce transactions. A high bar indeed for everyone else in the ecosystem! Their 7 pe 700 campaign has tested the limits of Bankers and their Core Banking System!

2) Verticals

Travel (Flight, Bus, Rail), movie ticketing, Food (Zomato), Gold, Financial Services, E-commerce marketplace. Paytm wants to be everything and do everything in the internet economy for Indian consumers. A great ambition indeed. These segments see great volumes and they are additional drivers of transactions for Paytm.

3) Offline

If there was anyone to whom the early success of QR needs to be attributed to, it is Paytm. They deployed Paytm wallet QR at offline outlets like there was no tomorrow. Demonetisation accelerated that effort when Paytm announced that they would hire 10,000 additional workers to deploy their Wallet QRs. However, UPIs success in the later years caused a rethink for Paytm. Of late, they have been deploying both UPI QR and Wallet QR at their offline partner outlets. Wallet QR or not, a significant % of customers don’t usually keep money in Paytm wallet, instead pay on demand. UPI would be driving a significant number of wallet topup or payments.


While their competitors have been increasing the surface area of utility for customers, Google Pay did not offer such exotic bouquet of features. Their app merely continued to have P2P transfers, Bill Payments, Scan & Pay - the usual features in any basic UPI app. It wasn’t until recently that Google Pay introduced Train ticket booking (oh and their UX is amazing!) & Gold purchase in their app. In the backdrop of reports that these 3 apps are driving >200 million monthly payments each & appear to be neck to neck in their race to leadership, seeing this in the context of offerings by these apps, I am inclined to believe that Google Pay is clearly emerging as the leader here.

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