Why Are Google, Facebook And Whatsapp Bullish About Digital Payment Services?

Must Read

LinkedIn Finally Rolls Out The Most Requested Feature By Users

Microsoft owned LinkedIn has recently been reported to have revamped its profile section with an amazing feature...

Google is Giving Microsoft a Taste of its Own Medicine

The latest version of the Microsoft Edge browser was launched about a month ago for Windows 10,...

Facebook Without Mark Zuckerberg And Sheryl Sandberg?

Imagine Facebook without Mark Zuckerberg and Sheryl Sandberg, the current CEO and COO of the world's largest...

India is going digital. From productivity to entertainment, Indians are increasingly reliant on technology to fulfil their myriad needs. However, while numerous facets of the Indian industry have adopted digital platforms readily, financial transactions remained anachronistically antiquated for a long while. This situation was turned on its head in late 2016 due to the demonetization move made by the Indian government. In an effort to curb the flow of black money, many cash note denominations were made defunct, leading to a nationwide cash crunch.

The initiative gave rise to the widespread adoption of mobile wallets and other digital transactions methods. The digital payment revolution is the biggest innovation in the Indian payments industry for years. There are numerous players such as PayTM, MobiKwik, Airtel Money, Idea Money, PhonePe, etc. vying for a sizable market share of Indian digital payments industry, which expected to reach $700 billion by 2022. Now news has emerged that tech giants Google, Uber, Facebook and Whatsapp are gearing up to enter this market.

So what does this mean for the future of digital transactions in India? And how will the industry react to this new development?

Advertisements

Mobile Wallet India: New Players Have Arrived

Emerging reports have suggested that Google is seeking approval from the Reserve Bank of India (RBI) to integrate the United payments Interface (UPI) with its Android Pay app. This comes among a slew of other reports outlining plans of several major companies to integrate UPI with their apps. Chief among them are Facebook and Whatsapp who are looking to integrate UPI with their chat messengers. Taxi hailing startup Uber is also working towards similar integration.

From Google’s perspective, this is a great move. Android is the dominant mobile operating system in India, with a 76.85% market share as of December 2016. This coupled with India’s 340+ million smartphone users provides Google an access to an extremely expansive user base. Such a large potential user base would give Google an instant leg up over its rivals. According to the National Payment Corporation of India (NPCI), Google will launch its UPI integrated wallet service within 2-3 months on a separate India focused app.

Like Google, Whatsapp and Facebook are also looking to integrate UPI with their chat messengers. They would be following Hike Messenger, who managed to beat them to the punch and release their mobile wallet. Just like Hike, integrating a social/messaging platform with a mobile wallet is a match made in heaven. Any payment service lives or dies based on the size of it userbase, and integration with a messaging platform provides unprecedented access to a massive amount of established users. This is a tried and tested strategy which has seen great success in the past, as in the case of WeChat in China.

Besides these tech giants, taxi-hailing startup Uber is also looking to get into the action. They are reportedly planning UPI integration on their app to allow customers to pay cab fare using existing UPI IDs. Currently, 60% of Uber drivers get paid in cash, something which could change drastically due to UPI.

Challenges Ahead

Despite the financial muscle and huge user bases these companies enjoy, there are significant hurdles for them on the road ahead. One issue is that Google, Facebook, Whatsapp and Uber are all late to the party. Mobikwik and PhonePe are two mobile wallets that already support UPI payments. Whatsapp and Facebook also have a direct rival – Hike Messenger, who has blazed ahead of them for now. The situation is similar with Uber too; their local rival Ola has already implemented UPI functionality. Arriving too late could potentially be a death sentence in such a cutthroat industry.

Advertisements

These companies would also have to partner with banks to enable UPI payments. This along with the need to comply with RBI norms could pose several roadblocks on the way.

Lastly, but perhaps most importantly, these companies would have to face up against PayTM. PayTM is currently India’s largest digital payment platform with over 218 million users. While PayTM currently does not support UPI, it will do so sometime in August, strengthening its position even further.

State Of The Industry

The digital payments industry is growing at a rapid pace. From 2011 to 2016, the industry grew at a CAGR of 28%. However, the industry recorded a massive growth of 55% in 2016-2017 alone, owing largely to demonetization. During the same period, cash in circulation has also gone down. From 2011 to 2016, around 12% of the GDP was in cash circulation. This number has reduced to 8.8% in 2016-2017. This amply demonstrates the growing digitisation of financial transactions in India. An analysis by NITI Aayog also disproved the notion that digital payments were suffering again post demonetization. All of this points to one simple fact – Payments in India are going digital. In fact, more than 80% of India’s urban population is expected to adopt digital payments by 2022, as well as around 70% of retail chains.

It is clear that the payments space in India is a very lucrative prospect for the coming years. Now as new players enter the game, prepare for the competition to heat up.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

India Wants A Bigger Chunk of $100 Billion In Global Taxes Levied On Google, Facebook and Amazon

It has been reportedly found out that India is adamantly pushing for a huge change at Organisation...

Facebook May Have To Pay $3.50 Per Month To Millions of Users?

Almost every internet tech giant, be it Facebook, Google or Twitter, has flourished by optimising and channelising their strategies that are largely...

Google Warns Users To Update Their Chrome Browser Right Away!

If you are an active user of the Chrome browser, Google wants you to stop all the work and update Chrome browser,...

TikTok Owner ByteDance Gearing Up To Challenge Facebook, Apple And Amazon!

ByteDance Inc. doesn’t want their massive success to go downhill after its blockbuster video app TikTok blew up in the social media...

Global Online Payment Frauds: Over $200 Billon Would Go Down The Drain In The Next 5 Years [REPORT]

The online payment frauds are becoming a new nightmare for digital users and authorities as well. It has been estimated that a...

Music Streaming Platforms In India: Gaana And JioSaavn Account For Over 50% Market Share!

The Times owned Gaana emerged as the top music streaming platform in India. It outpaced all peers by accounting a whopping 30%...

In-Depth: Dprime

YouTube Should Have Bid Adieu To Dislike Button Much Earlier?

Online video sharing platform YouTube can be a ruthless place for content creators targeted by 'dislike mobs'. And the site owners totally understand that...

Facebook Has Pulled Off A Masterstroke By Integrating Its ‘Family Of Apps’?

It’s indeed hard to believe that ONE man sitting at Menlo Park, oversees how nearly a third of the world’s population interacts with each...

Facebook’s Crunch Conquest: By Relying Largely On The US Market, Is Facebook Running a Risk?

Two billion! That's Facebook, Inc. (NASDAQ: FB) for you - Right when you thought that this social-media giant has already connected the entire world, it's...

More Articles Like This