Homebred solutions fail to make a mark on the UPI scene

The much acclaimed homebred payment solutions haven’t had it easy. Despite digital payments booming in CY2020, the share of these homebred products actually declined thanks to aggressiveness on the other part of the other players which are backed by foreign owners.

Homebred solutions fail to make a mark on the UPI scene
Not appealing for the home-grown

IN the wake of demonetisation in November 2016, there was a push towards digital payment. Two important developments took place. The first was the launch of BHIM or Bharat Interface for Money app in December 2016.

Just around that time, there was another mega push by PayTM, which too promised ease in payment using the digital mode.

The pandemic and the verdict

Digital payments, particularly Unified Payments Interface or UPI took off in right earnest in CY2020, when India went into a total lockdown in March-April 2020.

But while many Indians chose to migrate on to the digital payment platform, things haven’t been very easy for both BHIM app and PayTM. In fact, both these desi apps have conceded market share in the extremely competitive space.

BHIM not in contention

The app BHIM, for instance, doesn’t even have 1% market share of the total number of transactions put through using the UPI.

In fact, the app has seen consistently losing market share. In August 2018 for instance, the volume of transactions handled by BHIM app stood at ₹6,873 crore, but it dipped by roughly 10% by August 2019, hitting ₹6,132.1 crore.

In CY2020, even as both PhonePe and Google Pay (also known as GPay) saw increase in their market share, it was downhill for BHIM.

NPCI expresses helplessness

But it appears the National Payment Corporation of India or NPCI is helpless faced with this kind of growing competition. BHIM app users complain of not receiving adequate cashback.

Another issue relates to merchant discounts. The merchant discount is the discount offered to the merchant when they accept a UPI payment. NPCI has for instance disallowed merchant discounts thus discouraging merchants from accepting BHIM UPI payments. This saw these merchants patronising other UPI networks which didn’t work in favour of BHIM app.

NPCI disallowed these merchant discounts from January 2020 onwards, literally weeks before the nationwide lockdown began.

PhonePe, for instance, recently announced that its customer base rose to 300 million registered users.

“Our aim is to build even simpler, more localised and more intuitive payment solutions for our customers. We are looking to having 500 million registered users by 2023,” Outlook Money quoted Sameer Nigam, PhonePe’s founder and CEO as saying.

PayTM too suffers

Another casualty of the rising importance of foreign payment systems like PhonePe (it is part of Flipkart which is now owned by American giant, Walmart) and GPay has been PayTM.

PayTM, which is eyeing a listing on the Indian stock exchanges sometime around November 2021, has also seen its market share (in terms of number of transactions) dropping.

It has dropped from 14.5% in January 2021 to 12.14% in April 2021. But this is not the first time that PayTM has had to encounter falling market share. In April 2020, PayTM had a market share of 12.82% but this dipped to 10.1% as of May 2020.

It was only by September 2020 that PayTM was able to see a rise in its market share when it touched 11.57%.

TV9 Digital reached out to Vijay Shekhar Sharma, the man who controls PayTM, for a comment which was awaited at the time of publishing this report.