The leading player in the battle for mobile payments in India isn’t either of China’s pioneers, Alibaba Group Holding Ltd. orTencent Holdings Ltd. It isn’t Apple Inc, Visa Inc or even PayPal Holdings Inc.
The Alphabet Inc unit has for years tried to diversify its revenues beyond advertising by pushing into new fields like cloud computing and hardware. While its profits remain healthy, it needs new ways to make money as the specter of regulation looms at home and around the globe. Its booming new business in the world’s largest untapped digital market could be the engine of expansion that it has been looking for.
In India today, the company has one of its fastest-growing hits ever with Google Pay, a two-year-old app that millions of consumers are using to spend and transfer tens of billions of dollars.
Resembling a chat app and available in local languages, Google Pay was the most downloaded financial technology app world-wide last year, according to SensorTower, a research and marketing firm for the app industry.
Indian consumers use it to buy train tickets, pay bills and even to purchase lunchtime meals from street vendors. Tiny mom-and-pop shops around the country now display a logo with a large “G” and Google’s blue, red, yellow and green colors, signaling that merchants accept payments via the app, which is free for all to use.
“There’s good reason for Google being bullish,” said Satish Meena, a New Delhi-based analyst with research firm Forrester. “They’re getting good traction. The opportunity in India is massive.”
The app has been downloaded more than 180 million times since it launched in September 2017 and in the first half of this year, it clocked more downloads world-wide than PayPal or its Venmo app. It also outpaced Alipay, from Alibaba affiliate Ant Financial Services Group, data from SensorTower showed.
“India is setting the global standard on how to digitise payments,” Caesar Sengupta, Google’s vice president for its Next Billion Users initiative and payments, said Thursday at an event in New Delhi. In the past year, the service has processed transactions worth more than $110 billion on an annualised basis via the government’s popular real-time payments platform, he said.
Analysts estimate Google Pay is now used as much as or more than any other service, including apps backed by Tencent and Paytm, which counts among its investors Warren Buffett’s Berkshire Hathaway Inc, SoftBank Group Corp and Alibaba.
Google offers other payment systems branded Google Pay around the world, but Google Pay in India is the only service of its kind offering real-time payments without the use of credit or debit cards between individuals and businesses.
Shop owners can display a printed QR code for shoppers to scan, or two individuals can open the app, hold their phones together and use audio pairing to connect and make payments.
Hundreds of millions of Indians are entering the digital economy for the first time thanks to inexpensive mobile data and smartphones. Cash still rules, but most Indians have bank accounts and for simple payments they are skipping plastic and going straight to mobile.
The catalyst for mobile-payment growth came in 2016, when India’s government nullified the largest-denomination cash notes in circulation to curb corruption. That triggered a crunch and consumers had to stand in long lines for ATMs. Many downloaded mobile wallets like Paytm’s, learned more about digital payments and became comfortable making them.
Google, sensing an opportunity to get a digital payments foothold in the country of 1.3 billion, has used its massive war chest to capture users with an advertising blitz and cash awards.
The value of mobile payments in India is well behind China’s, but is ahead of the US. The value of mobile payments could nearly double to hit $450 billion a year by 2023, according to a 2018 report from Morgan Stanley, with Google wringing as much as $4.5 billion annually out of the business should it introduce advertising or other new services.
Google has an early lead but isn’t without challenges. The biggest one on the horizon is Facebook ’s WhatsApp. The platform has 400 million users in India, more than any other country, and it rolled out a trial payments service to a million users in February 2018.
Two months later, the Reserve Bank of India said payment-related data needed to be stored in the country and a complete rollout of the service has stalled. WhatsApp says it adheres to those rules and hopes to be able to fully launch the service to all users in India in the coming months.
Analysts say that Google, having fully launched Google Pay before the guidelines were issued, hasn’t been affected. A Google spokesman didn’t immediately respond to a request for comment on Google Pay’s adherence to data localisation guidelines.
“One year ago no one knew about this app,” said Surender Singh, a sales clerk in a New Delhi smartphone shop.
While customers still use rival apps, Google Pay’s usage is surging more than others, with nine or 10 people a day using it at his shop to buy items like chargers and headsets, spending as much as $40 per transfer, he said.
“If people don’t have credit cards or cash, they use Google Pay,” said Singh.
Source: The Wall Street Journal