NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, February 14, 2018

The fintech space in India is heating up. WhatsApp, the most widely used messaging app in the country, has recently started rolling out a Unified Payments Interface (UPI)-based payments feature here. Developed by the National Payments Corporation of India, UPI is an instant, real-time digital payment system for mobile-to-mobile money transfer between participating banks. With more than 200 million active users in India — the largest anywhere in the world — WhatsApp is expected to drive large volumes on peer-to-peer (P2P) payments and also become a popular platform for merchant payments. India is slated to be the first country globally to get the payments facility from WhatsApp.

Other global giants, too, are zeroing in on this space. For instance, Google has already launched its payments app Google Tez (“Tez” in Hindi means fast), while Samsung has launched Samsung Pay and Amazon has introduced Amazon Pay. While both Google Tez and Samsung Pay have been UPI-enabled for the past few months, Amazon Pay introduced the UPI feature earlier this week. Apple, too, is looking to introduce Apple Pay in the country in the near future. In a media interview a few months ago, Apple Senior Vice-President Eddy Cue said: “Apple Pay is something that we definitely want in India.”

Meanwhile, homegrown digital payment firms like Paytm, PhonePe, MobiKwik and FreeCharge (all are UPI-enabled) are strengthening their arsenal. Paytm, India’s largest online payments and mobile wallet company, has invested Rs5,000 crore ($786 million) in mobile payments to date. Paytm founder Vijay Shekhar Sharma has earmarked another Rs5,000 crore for the next three years. In a recent media interview, Sharma said: “As a company, we have invested the most and will continue to be the largest investor in digital payments in the country.” PhonePe, the digital payment arm of India’s leading e-tailer Flipkart, is planning to invest $500 million to scale up its technology platform and expand its merchant network and consumer base. According to CEO Sameer Nigam, PhonePe grew at over 100% every two months in 2017 and this investment will help them “maintain the same aggressive growth rate for the next two years.” Interestingly, Flipkart’s backers include Chinese conglomerate Tencent which owns WeChat, the largest digital payments service in China.

Photo courtesy of Peter Haden.