Walmart-backed digital payments player PhonePe emerged as the top app on India’s Unified Payments Interface (UPI) platform in December by pipping the market leader Google Pay.
According to data released for the month of December by National Payments Corporation of India, a government body that runs the UPI, PhonePe processed 902.03 million transactions, which were worth 1.82 trillion rupees (US$25 billion), while Google Pay came in second place with 854.49 million transactions (1.76 trillion rupees). Paytm Payments Bank app came a distant third with 256.36 million transactions (313 billion rupees).
Phone Pe and Google Pay accounted for more than 78% of the unified payments interface market in terms of volume of transaction, and 86% of the market by value of transactions in December.
New entrant WhatsApp Pay saw its transaction volumes double in December as against November. It processed 810,000 transactions worth 297 million rupees ($4 million) in December, while in November it had processed 310,000 transactions worth 136 million rupees. This platform is expected to get a boost as Reliance Retail has decided to embed its e-commerce app JioMart into the WhatsApp messaging service. This will allow users to order products without leaving the messaging app.
Google Pay saw an 11% fall in transaction volume in December, compared with November when it was still a leading player. In November, Google Pay saw 960.02 million transactions accounting for 1.61 trillion rupees, followed by PhonePe, with 868.4 million transactions worth 1.75 trillion rupees. In October, Google Pay accounted for 857.81 million transactions, while PhonePe had processed 839.88 million transactions.
Started by three former senior Flipkart executives in December 2015, PhonePe was acquired four months later by Flipkart. Later in 2018, it became part of the Walmart umbrella after the US retail giant acquired Flipkart for $16 billion. Last month Phonepe was partially spun off from Flipkart and its stake was reduced to 87% from 100%.
The unified payments interface platform witnessed a steady growth in 2020, barring a dip in April, when a countrywide lockdown to contain the spread of Covid-19 was in force. In December the total number of transactions on the platform was 2.23 billion, a marginal rise from November (2.21 billion). However, when compared with May (1.23 billion transactions), it is an increase of one billion.
The platform, which was developed by the National Payments Corporation of India in 2016, facilitates inter-bank transactions by instantly transferring funds between two bank accounts on a mobile platform. Currently there are 207 banks that support the platform.
Meanwhile, the National Payments Corporation of India’s new rule imposing a cap on transactions by third-party app providers came into effect on January 1. As per the new norm, an app provider will not be allowed to process more than 30% of the total volume of transactions occurring through the UPI interface.
Those who currently exceed this cap will be given two years to comply in a phased manner. While National Payments Corporation of India officials claim it will help address the risks and protect the digital payments ecosystem as it further scales up, it will take a toll on leading apps such as Google Pay and PhonePe. For users, it might also lead to a rise in failed transactions.