Google is one of the largest users of the UPI payment system in India.
Dheeraj Singh/Bloomberg
India’s large and growing digital economy is being drawn fintech investment And a note from foreign country payment companies. The country’s payments technology is now mature enough to export, creating a potential alternative to bank-led payment systems.
Google Pay and NPCI International Payments agree to expand support for United Payments Interface outside India. The partnership will allow travelers from India to make payments while abroad. It is also designed to enable merchants that support Google Pay to serve Indian consumers who can pay in the consumer’s home currency using the UPI app. Other goals include building his UPI-enabled real-time payment system interoperable in multiple countries.
UPI creates standard methods to support digital payments and real-time processing. By exporting UPI, Google could provide an instant payment option for international payments that replaces banks and government-run instant payment networks. in the united states It remains primarily focused on domestic trade.
Additionally, Google Pay could provide a way for U.S. e-commerce merchants to have the option of selling to India, or Indian consumers in the U.S., in their own currency. It would also provide an alternative to U.S. banks and other payment companies to enable cross-border e-commerce payments.
“Our partnership with Google will establish the use of UPI outside of India and increase real-time cross-border payments,” said Eric Glover, principal at Intrepid Ventures. “Given Google’s global reach, domestic real-payment settlement systems could become competitive around the world, at least on the acceptance side of the network.”
Google and NPCI collaborations include: used by Walmart Lead Walmart’s payments technology projects in other countries using payments technology from its Indian payments subsidiary PhonePe. visa and mastercard India is in the midst of a multi-year, multi-billion dollar expansion strategy. technology hub Build payment products that can be used in India and the rest of the world. And Amazon is trying to build a cross-border market. amazon pay This includes India.
UPI It is an instant payments system created in 2016 in India, almost two years before the RTP network and seven years before the FedNow instant payments network in the United States. The National Payments Corporation of India, a subsidiary of the Reserve Bank of India, operates UPI. It has also received support from the Indian banking industry.
Google Pay is a major user of UPI in India. According to , PhonePe accounts for his 46% share of UPI’s sales volume, while Google Pay ranks second with his 36%. Statista.
The number of banks supporting UPI has grown from 21 to nearly 500 over the past seven years. NPCIAccording to , the number of monthly transactions increased from 300 million in 2016 to 9.3 billion by the end of 2023. Statista.
UPI enables connectivity between banks and other parties through standardized applications to perform fund transfers, POS contactless payments via QR codes, recurring billing, e-commerce, and other transactions. Masu. UPI’s security system allows users to make payments without entering details such as card number or account number. UPI has played an important role in ‘.formalize“Indian economy, the share of India’s informal economy has declined from more than 50% in the late 2010s to about 20%” SBI Research. The “formal economy” in India refers to companies and workers that are regulated by the government.
NPCI’s Google Pay partnership follows similar partnerships. 2023 contract Partnering with French fintech Lyra to support UPI in France, signing agreement to enable UPI in France in 2023 United Arab EmiratesCanada, Australia, United Kingdom and approx. 6 other countries.
“Google Pay and Walmart (PhonePe) are the two largest UPI wallet providers,” said Gareth Lodge, senior analyst at Celent. “Google has a ready-made market. You just tap Google Wallet and it uses your UPI account and bypasses the card network.”
Writer american banker“The key lesson from UPI is that mobile-first, interoperable payment systems will increase access to financial services by expanding the pool of providers,” said John Mitchell, CEO and co-founder of payments technology company E6. It’s about how to enhance access. Competition and cooperation between market players will increase, leading to more choice and a better user experience for the industry as a whole, as well as for consumers.”
“This strategic partnership aims to accelerate the use of Google Pay powered by UPI for Indian tourists around the world, while also increasing the use of Google Pay through locally sanctioned payments,” the NPCI’s press office said in a statement. The aim is to pave the way for countries to integrate into India’s real-time payments ecosystem.” service provider. ”
Google’s press office said the purpose of the partnership is to enable Indians to use UPI outside India, create a domestic payment system outside India, and improve cross-border payments.
Google’s payment app uses UPI in India many yearsAnd sometimes this led to backlash from within the country. 2020 petition Get the government to ban Google apps.
Foreign payments and fintech companies have a complex relationship with Indian regulators. Regulators have sought to maintain local control of India’s fast-growing payments market with outside companies, mainly based in the United States, hoping to capitalize on the growth. visa and mastercard It has been battling the Indian government over rules that require card networks to store Indian payment data locally. Earlier this year, India banned the following groups: cryptocurrency exchangeCompanies such as Binance and Kraken claimed that the companies were not complying with money laundering regulations. This was announced a week after India granted payment aggregator licenses to fintech companies such as RazorPay, Cashfree and Open. This comes after dozens of fintech companies were banned from onboarding new customers in 2022.
Indian regulators have also imposed quantitative restrictions. Other limitations According to Digital Payment Apps, including Google Pay, today’s india and other local media.
“Indian regulators and NPCI want to restrict Google Pay in India, and they understand that.” [Google Pay] It can also be useful overseas,” Glover said.
