No growth in UPI payments on Google Pay in Dec-Feb

Google Pay had registered 857.8 million transactions in October 2020 and had reached a peak of 960 million transactions in November, commanding close to 43% market share in UPI payments. The platform has seen a continuous drop in transactions since. It recorded 854.4 million transactions December, 853.5 million in January, and 827.86 million in February.

Google Pay’s peak in November could be attributed to the ‘Go India’ game it ran on its platform, which included earning points after making UPI payments, said three people familiar with the matter.

Google’s market share has also dropped to 36% in February 2021 from 43% in November 2020.

The slide is largely because of banking outages by top banks, as well as Google’s lack of focus on merchant payments, which is giving market leader PhonePe and Paytm a competitive edge, said the people mentioned above.

Peer-to-peer or P2P transactions of Google Pay on UPI grew only by 4.5%, between October and February, NPCI data shows. Peer-to-merchant or P2M transactions, however, saw 20% growth in the same time period. P2P transactions are between users, while P2M transactions are when a user makes a payment to a registered merchant on UPI.

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“There would be almost a 80-90% overlap of customers between the top 3 UPI players including Google Pay, PhonePe, and Paytm, which essentially means that the big three are contesting for the same customers, reducing room to grow on peer-to-peer (P2P) payments. Hence, the next phase of UPI growth will come from adding more merchant use-cases and acceptance,” said one of the persons mentioned above, asking not to be named.

“Google Pay faced decline because of banking outages in December and January and that depreciated the user trust on the platform as transactions started getting stuck. However, now it is clear that Google Pay also faces a growth issue in terms of merchants and users,” said a second person.

Google Pay didn’t respond to queries.

Rivals PhonePe and Paytm in recent months have been investing heavily in increasing their merchant base to expand the net of UPI acceptance. “Google Pay’s focus and popularity is mostly urban metro users, where UPI payments can soon become a saturated market for growth,” said the third person.

NPCI chief executive Dilip Asbe at an event last week agreed that transaction declines were on the rise on the UPI network between October and December because of tech integrations by several banks causing outages. This has been resolved and the industry can expect better approval rates on UPI, Asbe said.

PhonePe processed close to 975.5 million transactions in February 2021 and widened the gap with competitor Google Pay by 147.6 million transactions.

PhonePe, which took over the market leadership from Google Pay on UPI last December, added close to 7 million merchants in the last eight months. It also said that more than 54% of transactions on its network in February were merchant payments. Paytm, which increased its transactions from 244.94 million in October to 340 million in February, credited its technology infrastructure for its growth.

“Our tech team, which comprises the best minds in the business, works round the clock to provide a seamless and efficient experience to our users and merchant partners. We have witnessed rapid adoption of our UPI payments service across the country,” said Satish Gupta, chief executive of Paytm Payments Bank Ltd.