Google Pay Will Thrive Only in India

Google recently announced that it will discontinue its standalone payments app, GPay, in the US starting June 4, 2024. However, users in India will see no changes, as Google continues to cater to the country's specific needs. 

The reason behind Google’s decision remains unknown, though industry speculation indicates that the goal may be to enhance user experience through streamlined operations and potentially reduce development costs. 

Moreover, the US already has well-established card-based payment systems that are deeply ingrained in consumer habits and banking infrastructure. 

Google Pay’s India Picture

Globally, more than 180 countries use Google Pay for online and in-store shopping. As per AltIndex.com data, GPay is more popular for payments in India and Poland than in the US or the UK. In India, eight out of ten consumers use GPay, which is three times more than in the US. 

Over the past five years, more than one billion people in India have started using mobile POS payments, bringing the total number of users to 1.6 billion in 2023. As one of the top five service providers in the market, Google Pay has played a significant role in the growth. 

UPI Fever in India Continues

In April 2024, addressing the ‘Viksit Bharat Ambassador’ event at GITA in Visakhapatnam, Finance Minister Nirmala Sitharaman mentioned that India recorded about 131 billion UPI transactions with a total value of ₹200 trillion in FY24.  

As per the National Payments Corporation of India (NPCI) data, about 83.7 crore transactions worth ₹139 trillion were conducted through UPI in FY23. 

As things stand, PhonePe (47%) and Google Pay (36.64%) have a nearly 84% share of the UPI market by volume (number of transactions), according to NPCI data. Paytm Payments Bank, which is a distant third, saw its market share fall after the Reserve Bank of India (RBI) imposed restrictions on it in January. The next two, Cred and Amazon Pay have a market share of less than 1% each.

US Always Has a UPI Problem

UPI has emerged as a transformative service in India’s financial landscape but the US faces significant hurdles in adopting a similar system. 

The primary challenge lies in the dominance of card networks like Visa and Mastercard in the US. These companies wield substantial lobbying power, influencing policies to protect their market share and revenue. 

For instance, when countries including India and Indonesia sought to develop domestic payment systems that could potentially compete with these global giants, US trade officials intervened to protect the interests of Visa and Mastercard. 

Earlier in 2020, the US attempted to build an instant payment system with FedNow. It is very basic and can be compared to the RTGS system in India which was introduced in 2004. Moreover, FedNow’s model includes potential transaction fees for consumers which contrasts with UPI’s fee-free structure.  

Additionally, cultural and market differences play an important role. Unlike India, where digital and card-based payment systems were not widely adopted initially, the US has a highly developed financial infrastructure with widespread debit and credit card usage. This makes it more challenging to introduce a new system that disrupts existing revenue models and consumer behaviours. 

Expansion Continues

Though the US paints a not-so promising picture with GPay, UPI is increasingly being implemented in other countries. In March 2024, NPCI with RBI’s approval, launched NPCI International Payments Limited (NIPL) to expand usage of RuPay and UPI beyond India. This initiative enables Indian travellers to utilise RuPay cards and UPI for transactions in other countries.

Currently, UPI is operational in six countries including Bhutan, Mauritius, Singapore, Sri Lanka, UAE, and France. 

When travelling to any of these countries or needing to make payments to merchants based there, one can just activate UPI international on PhonePe, Google Pay, or the BHIM app. 

In a recent update, NIPL announced that Indian tourists can now buy tickets for the Eiffel Tower and pay via UPI. It has partnered with Lyra Network, a French leader in securing. It collaborated with Lyra Network, a French company specialising in secure e-commerce and payments, to introduce a UPI payment system in France, beginning with the Eiffel Tower.