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Government to Delay Digital Payments Market Share Cap, Helping Walmart-Backed PhonePe, Google Pay

India will again delay caps on market share for a popular digital payments method, two sources told Reuters, benefiting Google Pay and Walmart-backed PhonePe as the authorities prioritise growth over concerns about market concentration.

The National Payments Corporation of India (NPCI), the quasi-regulator, will extend by as much as two years a year-end deadline to cap at 30 percent the market share of any company processing payments via the Unified Payment Interface (UPI), the sources with direct knowledge of the matter told Reuters.

PhonePe’s share of UPI payments has risen to 48.3 percent from 37 percent in April 2020, while Google Pay’s share has declined to 37.4 percent from 44 percent, according to NPCI data. The two processed a combined 11.5 billion transactions in April, the data showed.

NPCI and Google Pay declined to comment. PhonePe did not respond to an email seeking comment.

India launched UPI in 2016 but barred companies from charging for the instant digital payments service in an effort to promote online transactions and reduce the use of cash in Asia’s third-largest economy.

Because they cannot charge for it, India’s banks and others like Meta-owned WhatsApp and Amazon Pay have not pushed UPI-based payments aggressively, leaving authorities worried about a concentration risk.

While their apps do not earn money from the payments, PhonePe and Google Pay have been able to use their UPI customer base to sell services such as loans and insurance.

NPCI, which has a regulatory mandate from the central bank, announced the 30 percent cap in 2020 but later extended the deadline by two years to the end of 2024.

The deadline will have to be extended again, said one of the sources, as it is not possible for PhonePe and Google Pay to reduce their market shares without hurting UPI payments growth.

A final decision on the extension will be communicated closer to the deadline, said the sources, who asked not to be identified because they are not allowed to speak to the media.

NPCI had hoped for more competition when WhatsApp was permitted to offer UPI-based payments in February 2020, but the company had just 0.2 percent market share as of April.

India’s Paytm, with the third-highest share, has experienced a decline in payments processed through its platforms after regulators placed curbs on a group entity.

Payment firms want the market-share cap removed, asking NPCI to let them charge for UPI payments to encourage competition, said an official at a payment company.

The government will decide whether to allow firms to charge for UPI payments, the two sources said, but one said NPCI does not favour removing the share cap.

The volume of UPI transactions rose 49.5 percent in April from a year earlier, less than the 54 percent rise logged March.

The central bank met on Tuesday with industry executives to brainstorm on ways to expand the UPI user base, which was about 300 million users and 50 million merchants late last year, according to the most recent data.

© Thomson Reuters 2024

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Google Pay to Roll Out SoundPod With Audio Alerts to Merchants in India After Year-Long Pilot

Google is rolling out the SoundPod — the company’s wireless speaker that can verify payments received over the Unified Payments Interface (UPI) instant payment system — to small merchants in India, the company announced on Thursday. The company started testing the device as part of a limited trial last year and has revealed that the rollout will take place later this year. Google Pay rivals PhonePe and Paytm — the latter faces RBI strictures over non-compliance with multiple rules — already offer similar products for merchants in the country.

In a blog post on Thursday, Google VP of Products for Google Pay Ambarish Kenghe announced that the company’s SoundPod would be rolled out to small merchants in the country “over the coming months”. During Google’s year-long trial of the SoundPod in India, the firm received positive feedback from merchants who participated in the trial, including faster checkouts, Kenghe said.

The SoundPod is equipped with an LCD screen and a single speaker. It supports 4G connectivity, according to Google. It has three LED indicators to show battery, charging, and connectivity status of the device, and features menu, volume, and power buttons.

The SoundPod has an LCD display and speaker that face the merchant
Photo Credit: Google

 

Paytm’s ‘Soundbox’ speakers offer between four to 12 days of battery life and feature 2G or 4G connectivity — two models are equipped with LCD screens, while another supports music playback over a Bluetooth connection. On the other hand, PhonePe’s SmartSpeaker offers up to four days of battery like on a single charge and supports multiple languages.

While the company hasn’t offered a concrete timeline for the arrival of the SoundPod in India, rivals like Paytm and PhonePe offer similar audio devices that are already in use by merchants across the country. Merchants also pay a monthly subscription — between Rs. 50 to Rs. 125 — to access these audio-based announcement service.

Google says that merchants will be able to choose between two subscriptions for the SoundPod — a Rs. 499 one-time fee followed by a Rs. 125 monthly subscription plan, or an annual subscription priced at Rs. 1,499. Merchants won’t have to pay the one-time fee when choosing the annual plan. Customers who receive 400 payments in a month via QR codes will get a guaranteed Rs. 125 cashback, according to the company.

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PhonePe Launches Indus Appstore in India, Will Not Charge App Listing Fee for the First Year

PhonePe launched its Android-based mobile app marketplace, Indus Appstore, in India on Wednesday, February 21. The app store was launched by the Communications, Electronics and Information Technology Minister Ashwini Vaishnaw during a hybrid event. The Walmart-owned fintech firm said its new app storefront intends to solve the major pain point of the lack of regional language content in marketplaces. The Indus Appstore will be available in English and 12 Indian regional languages. It also comes with features such as video-led app discovery, mobile-based logins, and AI-driven app recommendations.

Indus supports regional languages like Hindi, Kannada, Malayalam, Marathi, Punjabi, Tamil, and more. It comes with a toggle button on the top through which users can switch between languages. The toggle not only changes the language of the content on the interface but also app names, app trailers and videos, as well as app descriptions. PhonePe said that the translations were done at the company’s end.

Further, the platform also allows users to search in any of the 12 regional languages to see search results in those languages. PhonePe founder and CEO Sameer Nigam said that even transliterations in regional languages will fetch results. Android smartphone users can download and install the app here.

Indus Appstore has 200,000 apps at its launch, the company said. Some of the prominent apps include Flipkart, Disney+ Hotstar, Myntra, Zomato, Swiggy, Snapchat, and more. The number also includes several thousand games, where it is heavily focused. The platform has three major categories in gaming which are casual gaming, heavy gaming and real money gaming (RMG).

App listings on the developer platform will be free for the first year but after that, an annual fee will be levied. PhonePe also stated that the marketplace will not charge developers any platform fee or commission for in-app payments if separate payment gateways are used. In contrast, Apple and Google charge between 15 percent and 25 percent commission for the same and do not allow integration of other payment services.

Additionally, the platform allows users to do a mobile number and OTP-based logins instead of using emails. For app recommendations, the developer platform uses artificial intelligence (AI)-based algorithms and uses location data. There are a couple of smart features as well such as smart updates that will allow for faster updations to the latest version. The personalised storage management feature will recommend to users the rarely used apps which can be put into hibernation (updates will be stopped) and the apps which are never used and can be deleted.

Nigam also said that app developers will have an option on whether to show ads in their apps or not. Those who opt in will be able to earn a commission from the generated ad revenue.

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PhonePe Launches Feature to Pay Income Tax Through Its App

Digital payments and fintech platform PhonePe on Monday launched a feature to pay income tax through its app. 

Individuals and businesses can pay self-assessment and advance tax through UPI or credit card via the application, without logging into the income tax portal, PhonePe said.

The amount will be credited to the tax portal within two working days.

Users can pay taxes by logging into the app and selecting the “income tax” icon. Then, they must select the type of tax to be paid, assessment year and Permanent Account Number (PAN) details. After entering the total tax amount, users will be able to pay using the chosen mode of payment.

Taxpayers will receive a Unique Transaction Reference (UTR) number as an acknowledgement within one working day after paying the tax while challan for the payment will be available within two working days, it added.

Niharika Saigal, Head of Bill Payments and Recharge Business at PhonePe said, “Paying taxes can often be a complex and time-consuming task, and PhonePe is now offering its users a hassle-free and secure way to fulfill their tax obligations…this will transform the way our users pay taxes as we have now made the process both simple and easy.” PhonePe has partnered with digital B2B payments service provider PayMate for enabling the feature.

Started in 2015, the Walmart subsidiary was recently separated from its e-commerce sibling Flipkart. PhonePe has about 50 crore registered users and processes 45 per cent of transactions on Bharat Bill Pay System (BBPS). The company became a fintech in 2017 and launched mutual funds and insurance products. 

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Flipkart, PhonePe Could Be $100 Billion Businesses in India, Claims Walmart CFO

Walmart‘s Flipkart marketplace and PhonePe payments business in India could be $100 billion (Rs. 8,19,750 crore) businesses buoyed by strong growth, the retailer’s chief financial officer said on Wednesday at an investor conference.

Walmart does not break out sales of Flipkart and PhonePe but over the past few months, executives have singled out the two businesses as key drivers in meeting its target of doubling the gross merchandise volume it sells in foreign markets to $200 billion (nearly Rs. 16,20,800 crore)  in five years.

Walmart’s international chief has previously called India’s 1.4 billion population a “significant” opportunity for the retailer.

In its most recent quarter ended April 30, Walmart said its Flipkart business generated double-digit sales growth, boosted by new shoppers in some cities and a 50 percent jump in ad sales. Flipkart was valued at more than $40 billion (nearly Rs. 3,27,900 crore) in 2022 and counts itself among India’s most valuable startups.

Walmart also called PhonePe’s performance “really impressive” after it hit an annualized payment value led by the Unified Payments Interface, a highly popular method in India to make instant real-time payments.

PhonePe controlled 46 percent share of the payments market in December, according to National Payments Corporation of India, and has 400 million registered users. In March, Walmart gave that business a boost by pouring an additional $200 million (nearly Rs. 1,640 crore) at a pre-money valuation of $12 billion (nearly Rs. 98,360 crore) cementing its position as India’s most valuable payments startup.

“It is not crazy to think that both those businesses could be $100 billion businesses in the future,” Walmart’s Chief Financial Officer John David Rainey said.

© Thomson Reuters 2023

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Walmart CEO Expects Exporting Goods Worth $10 Billion From India by 2027

Retail giant Walmart on Wednesday said India’s unique ecosystem of suppliers will help the company in achieving its goal of exporting goods worth $10 billion (nearly Rs. 81, 950 crore) from the country annually by 2027.

Addressing Indian suppliers and partners, Walmart President and CEO Doug McMillon reaffirmed the roadmap for strengthening partnerships with Indian communities, expanding opportunities for Indian businesses and fostering transformative and innovative solutions for retail from India to the world.

India’s unique ecosystem of suppliers will help power Walmart’s goal of exporting goods worth $10 billion from India annually by 2027, according to a statement.

“Walmart is committed to India and we are here for the long term. We are excited about the Indian suppliers and partners who make quality, affordable, and sustainable products for our customers and members around the world.

“We are proud that our business can support India’s growth by creating jobs, strengthening communities, and accelerating India’s progress as a manufacturing destination,” he said in a statement.

Walmart leadership, including McMillon and Judith McKenna, President and CEO of Walmart International, interacted with a cross section of suppliers, merchants, grantees, artisans and MSMEs across key India programs and initiatives.

These include Walmart Sourcing, Walmart Vriddhi, Flipkart and Flipkart Samarth, PhonePe, Walmart Marketplace, Walmart Global Tech in India, and the Walmart Foundation.

“India has long been a priority market for Walmart, and we care deeply about the country and its future. I am continually impressed by the entrepreneurial spirit across the country, and that spirit is one of the reasons Walmart is proud to play a small part in India’s growth story,” Judith McKenna said.

In December 2020, the retailer announced to triple its exports of goods from India to $10 billion each year by 2027, endorsing India’s continuing rise as a global hub of manufacturing. 

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ONDC Framing Mechanism to Ensure Rule Compliance by Entities Involved

Government-promoted Open Network for Digital Commerce (ONDC) is framing a mechanism to ensure compliance with its rules by entities involved in online retail trading, a senior official said on Thursday.

The ONDC aims to promote an open platform for all aspects of e-commerce retail. It would help small retailers expand their business through e-commerce medium and reduce dominance of giants in the sector.

“If we see that any player is not following our rules, we would take action. We are in the process of finalising things. Law of land should be followed. We are in the process of making that mechanism,” Joint Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Sanjiv told reporters here.

A set of rules on protection of personal information and setting up of grievance resolution mechanisms would be part of the comprehensive ONDC network policy.

According to a consultation paper released by ONDC last year, one of the chapters of the policy on grievance management would frame mechanisms for the participants to manage and resolve grievances filed against them by buyers and sellers.

ONDC, a non-profit company, formulates a set of standards for voluntary adoption by sellers or logistics providers or payments gateway operators.

The ONDC will require an undertaking from each participant at the time of onboarding that it will comply with the policy in its entirety.

Sanjiv also said that ONDC has achieved major milestones in the past few months, including 37 network participants ranging from market leaders to emerging Indian startups, over 26,000 merchants, and over 27 lakh products offered on the network.

“Our dream is to cover all the pin codes of the country by the participants of the ONDC and hopefully we will be achieving that. Earlier we were requesting people to onboard the network and now the companies are approaching us to onboard,” he said.

Most major product categories, including grocery, food and beauty products are live on the network, with expansion to more product categories underway. Mobility services has been enabled in two cities — Kochi (taxi services app Namma Yatri) and Bengaluru (auto services).

ONDC’s geographic coverage has expanded to over 210 cities across India, and its logistics partners can deliver products to about 90 percent of the pin codes across India.

ONDC CEO T Koshy said that more and more sellers, consumer apps, logistics firms, payment gateways are joining the network and “we hope to maintain this momentum”.

Its participants are taking steps to support and handhold sellers to onboard the network and help consumers understand how to use ONDC.

At present, about 600 transactions per day are happening through this network from the earlier 30-40 transactions.

Koshy added that big players who have onboarded the network include HUL, P&G, Paytm, PhonePe and ITC and the network is getting “good traction”.

“We are inviting all big and small players,” Sanjiv said, adding that the number of merchants on the network has increased by 200 to about 50,000 now.

In about 15 cities like Mumbai, Delhi, Bengaluru, Bhopal and Kolkata, over 100 merchants have on-boarded the network.

ONDC has on-boarded its handloom weavers from Kancheepuram, to sell their products through ONDC across India with support from the Small Industries Development Bank of India (SIDBI). Similarly, NABARD is helping farmers producers’ organisations (FPOs) about the usage of this network.

Logistics firms that have onboarded include Dunzo, Shiprocket, Delhivery, and Shipyaari. 

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Tiger Global, Accel Mulling $1.5 Billion Stake Sale in Flipkart to Walmart: Report

Private equity firms Accel and Tiger Global, two early backers of Indian e-commerce firm Flipkart, are in talks to sell their remaining stake in the company to parent Walmart for about $1.5 billion (roughly Rs. 12,235 crore), the Economic Times reported on Thursday.

The stake, which collectively amounts to about 5 percent, would raise Walmart‘s ownership in the e-commerce giant, the newspaper reported citing people familiar with the matter.

“They (Accel and Tiger) want to sell and exit now fully. The discussions are moving ahead and the transaction will close in due time,” a person familiar with the matter told ET.

Accel owns a little over 1 percent of Flipkart, while Tiger Global holds about 4 percent of the company, the report said.

Flipkart, Walmart, and Tiger Global did not immediately respond to Reuters’ requests for comment. Accel could not be immediately reached for a comment.

Walmart acquired a majority stake in Flipkart for about $16 billion (roughly Rs. 1,30,000 crore) in 2018 – its biggest deal ever – and later that year said it could take the company public in four years.

In April last year, Reuters reported that Flipkart had internally raised its IPO valuation target by around a third to $60 billion (roughly Rs. 4,90,000 crore) – $70 billion (roughly Rs. 5,70,00 crore), and plans a US listing in 2023.

Earlier this month, Walmart confirmed that it had already paid the Indian government most of the nearly $1 billion (roughly Rs. 8,300 crore) in tax owed after digital payments company PhonePe, which the US retailer owns through Flipkart, shifted its headquarters from Singapore to India.

Walmart bought a controlling stake in Indian e-commerce giant Flipkart in 2018, giving it ownership of PhonePe. The company said last month it had completed the separation of PhonePe from Flipkart, adding that it would remain a majority stakeholder in both companies.

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Flipkart, PhonePe Complete Separation, Both Entities to Continue Operation Under Walmart

Flipkart and PhonePe have completed their separation and both entities will continue to operate under US-based retail giant Walmart, a joint statement said on Friday. PhonePe was acquired by Flipkart Group in 2016.

“As part of this transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India. This completes the move to make PhonePe a fully India domiciled company, a process that started earlier this year,” the statement said.

Walmart will remain the majority shareholder of both business groups.

“Flipkart and PhonePe are proud, homegrown Indian brands with a user base upwards of 400 million each. We are looking forward to the next phase of our growth as we invest in new businesses – like insurance, wealth management and lending, while also enabling the next wave of growth for UPI payments in India. This will help propel our vision to provide billions of Indians with financial inclusion,” PhonePe Founder and CEO Sameer Nigam said.

This year, PhonePe changed its domicile from Singapore to India.

Since its launch, PhonePe has successfully digitized more than 35 million offline merchants spread across tier 2, 3, 4 cities, and beyond, covering 99 percent of PIN codes in the country, the statement said.

“We are proud to see PhonePe grow and thrive as a successful organization in its own right. We are confident PhonePe will continue to scale and achieve its vision of providing financial inclusion to millions of Indians,” Flipkart Group CEO Kalyan Krishnamurthy said.

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WhatsApp Pay India Head Quits Within Four Months of Taking Charge

Vinay Choletti, head of WhatsApp’s India payment business, has quit the firm within four months in the role, marking the latest in a series of domestic senior-level departures at parent company Meta Platform.

“As I move on to my next adventure, I strongly believe that WhatsApp has the power to phenomenally transform digital payments and financial inclusion in India and I look forward to seeing it leverage its potential in the coming years,” Choletti wrote on LinkedIn late Tuesday.

Meta has seen a series of changes in executive roles in the recent months. WhatsApp’s India head Abhijit Bose, Meta’s public policy director in India Rajiv Aggarwal and Meta’s India head Ajit Mohan had resigned in November.

Meta did not immediately respond to Reuters request for comment.

Choletti took charge of WhatsApp Pay in India following Manesh Mahatme’s exit in September to join Amazon.

Before joining WhatsApp Pay in October 2021 as the head of Merchant Payments, Choletti had worked at Amazon for seven years, according to his LinkedIn profile.

WhatsApp, the messaging service owned by Meta, been trying to lure more Indians to its peer-to-peer payments service as it tries to ramp up in a highly competitive market and lock horns with more established payers such as Alphabet‘s Google Pay, Ant Group-backed Paytm and Walmart‘s PhonePe.

Meta was in the middle of massive layoffs last month, cutting more than 11,000 jobs or 13 percent of its workforce, as the Facebook parent doubled down on its metaverse bet amid a crumbling advertising market and decades-high inflation.

© Thomson Reuters 2022

 

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