Payments aggregator BillDesk on Monday announced a partnership with global financial institution J.P. Morgan to offer online payments solutions to the bank’s corporate clients in India.
Through this partnership, J.P. Morgan’s clients in India will be able to independently initiate statutory and utility payments online with more than 100 merchants that BillDesk partners with, securely and without additional manual assistance from their partner banks.
The solution integrates BillDesk’s payments platform with the J.P. Morgan Access banking portal, and uses application programming interface (API) technology to authenticate and verify payments instantaneously, allowing payments to be executed in real time.
“This partnership is a great example of J.P. Morgan’s commitment to leverage local innovation to offer a simplified payment experience to corporates,” said Guhaprasath Rajagopal, head of Wholesale Payments for India, J.P. Morgan. “In the past, the initiation of statutory and utility payments required our clients to engage in fairly manual processes.”
The process is fully automated and the bank claims that corporates can fulfill their statutory and utility payment obligations in a secure and convenient manner, while saving on time and costs.
“Our platform combines leading-edge technology with extensive expertise to offer reliable and powerful payment processing solutions to digitize day-to-day payments of corporates in India,” said Karthik Ganapathy, director and co-founder of BillDesk.
UPI transaction value witnessed a growth of 18.7 per cent month-on-month to Rs 5.05 lakh crore in March 2021 from Rs 4.25 lakh crore in February 2021.
Amid Covid, India was home to the highest number of real-time online transactions in 2020 ahead of countries such as China and the US. 25.5 billion real-time payments transactions were processed in the country followed by 15.7 billion in China, 6 billion in South Korea, 5.2 billion in Thailand, and 2.8 billion in the UK. Among the top 10 countries, the US was ranked ninth with 1.2 billion transactions. The transaction volume share for instant payments India, among real-time transactions, was 15.6 per cent and 22.9 per cent for other electronic payments in 2020, according to a report by the UK-based payments system company ACI Worldwide. Importantly, paper-based payments continued to have a considerable share of 61.4 percent in India.
However, this is expected to change by 2025 as volume shares for instant payments and other electronic payments are likely to grow to 37.1 per cent and 34.6 per cent respectively. Consequently, the share of paper-based transactions would contract to 28.3 per cent. Moreover, the share of real-time payments volume in overall electronic transactions will exceed 50 per cent by 2024. “India’s journey of creating a digital financial infrastructure has been characterized by collaboration between the government, the regulator, banks, and fintechs. This has helped to advance the country’s goal of enabling financial inclusion and also provided rapid payments digitization for citizens,” said Kaushik Roy, VP and head of product management, Asia, ME and Africa, ACI Worldwide in a statement.
India’s digital payments market led by Paytm, PhonePe, Pine Labs, Razorpay, BharatPe, and others on the B2C and B2B sides has surged during the pandemic even as incentives such as cash backs, rewards, and offers have helped businesses to attract more customers. Moreover, policy frameworks such as Pre-Paid Instruments (PPI), Universal Payment Interface (UPI) by the NPCI apart from Aadhar, and the launch of BHIM-app have driven the financial inclusion and improved the payment acceptance infrastructure in the country in the past few years.
According to another report by the Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young, digital payments in India is expected to grow at 27 per cent CAGR during the FY20-25 period from Rs 2,153 lakh crore transactions in FY20 to Rs 7,092 lakh crore in FY25. UPI transaction value witnessed a growth of 18.7 per cent month-on-month to Rs 5.05 lakh crore in March 2021 from Rs 4.25 lakh crore in February 2021 while transaction volume rose by 19 per cent to 2,731.68 million from 2,292.90 million during the said period, according to data released by National Payments Corporation of India (NPCI).
The gap between the top three UPI apps and WhatsApp Pay is quite epic.
It took a good over a two-and-a-half-year period for Facebook-owned WhatsApp to roll out its much talked about payments service in November 2020 from around February 2018 when the messaging giant had started testing the feature. In October 2020, a month before the rollout, WhatsApp Payments or WhatsApp Pay had processed 70,000 UPI transactions amount to Rs 9.32 crore. In its first month (November) of approval from the National Payments Corporation of India, which operates the UPI payments infrastructure, the figures jumped to an impressive 3.1 lakh transactions worth Rs 13.87 crore. However, the growth, in transactions primarily, since its launch till February 2021 arguably hasn’t picked the kind of pace one would have expected from WhatsApp that counts over 500 million users in its biggest market India. As per NPCI data, WhatsApp managed to scale to 5.5 lakh UPI transactions worth Rs 32.41 crore in February.
“The reason is very clear. It is the lack of use cases. Right now, WhatsApp is offering peer-to-peer (P2P) payments. There is no geography where just on the back of P2P payments, digital payments have proliferated. They don’t have those P2M transactions or use cases defined really well,” Arnav Gupta, an analyst at Forrester Research told Financial Express Online.
WhatsApp didn’t reply to an email seeking comments for this story.
The Roadblock
While the company has been studying the digital payments market for at least three years, the business side of the platform has been a roadblock for the company as WhatsApp hasn’t been able to further evolve it and connect it back to payments proposition. For example, Gupta said that WhatsApp is only a unilateral channel of communication for enterprises to speak to their customers. For instance, a travel portal can send a customer’s travel tickets and invoice on WhatsApp but he/she cannot talk back to the company while there are very few and limited use cases where there are chatbots set-up. According to Gupta, that is the struggle WhatsApp is going through.
WhatsApp’s viral growth and the kicking off of its networking-effects in the early days was certainly the stuff of legend. However, that has not translated yet in its payments business that has been approached in fits and starts. “WhatsApp’s desire to keep its interface consistent across geographies meant it was unable to create a dedicated payments interface within the app for India despite the exploding UPI market. This means it lags in a market it could have clearly dominated. Even when we look at the data in the past three months, its transactions have fallen in January 2021 from a December 2020 high,” Utkarsh Sinha, Managing Director, Bexley Advisors, a boutique investment bank firm, told Financial Express Online.
Importantly, WhatsApp Pay rollout had coincided with the NPCI announcement in November that third-party applications offering UPI payments service can process a maximum of 30 per cent of the transaction volumes starting January 1, 2021. The decision, according to an NPCI statement, was taken to “address the risks and protect the UPI ecosystem as it further scales up.” Moreover, NPCI had allowed WhatsApp to launch payments service in a graded manner to a maximum of 20 million registered users in UPI.
“Limiting the number of digital payments that could be made via payment apps adversely affected all other wallets, including WhatsApp,” Prabir Chetia, Head – Business Research & Advisory, Aranca told Financial Express Online. Moreover, the entire payment section had a step-by-step launch with no marketing push. “There was no big bang marketing campaign to announce its entry into the payment space. Hence, the awareness regarding this new offering of WhatsApp is very low. Consumers who are tech-savvy and active users of the app may know about it and even use it, but many others still view it as a communication tool,” added Chetia.
Missing the Bus
The thought perhaps at WhatsApp back in 2017 was about leveraging the customer loyalty for its messaging environment to plug-in the payments service. This would have meant for customers to remain within WhatsApp instead of exiting it and using Paytm, PhonePe, Google Pay, others for transacting online. However, a nearly three-year long period from testing the service to its eventual launch has perhaps impacted its growth. “Had they been able to launch then (in 2018), they would have evolved like others. They have missed the bus by over two years. Having said that, their partnership with Jio could be a potentially viable business model and can create some buzz. But JioMart is not available on WhatsApp in all the cities currently,” said Gupta.
In April 2020, Facebook had picked up a 9.99 per cent stake in Jio Platforms at $5.7 billion. The deal had supporting India’s vast small business base digitally as its key focus. Moreover, Mark Zuckerberg at a company event in December 2020 with Mukesh Ambani had revealed that WhatsApp has 15 million business app users from India. “Jio brings digital connectivity, WhatsApp now with WhatsApp Pay brings digital interactivity, and the ability to move to close transactions and create value, and Jio Mart brings the unmatched online and offline retail opportunity, that gives our small shops which exist in villages and small towns in India, a chance to digitise and be at par with anybody else in the world,” Ambani on his part had said. Jio and WhatsApp have more than 400 million customer base in India.
“WhatsApp has been ironing out its strategy for the space since 2017. But that has led it to concede valuable space to the current incumbents. If WhatsApp was aggressive in payments to start with, a lot of the current competition would have struggled to gain a foothold,” said Sinha.
The Epic Gap
Current UPI payments incumbent PhonePe had cornered an impressive 42.5 per cent share of the 2,292.90 million UPI transactions in February, as per NPCI data. Walmart’s payment arm in India – PhonePe had processed 975.53 million UPI transactions amounting to Rs 1.89 lakh crore. Likewise, Google Pay, which lost the top spot to PhonePe in December 2020, was the second-largest UPI app in February processing 827.86 million transactions (36 per cent of total UPI volume) worth Rs 1.74 lakh crore. On the other hand, Paytm was still the distant third player in February recording 340.71 million transactions involving Rs 38,493.52 crore. It had processed 332.69 million transactions worth Rs 37,845.76 crore in the preceding month.
The gap between the top three UPI apps and WhatsApp Pay is quite epic. “WhatsApp has a huge user base. However, these users are using it as a communication tool. Will they become loyal to its payment solution? I think it is unlikely,” said Chetia. Despite a large user base, those living in Tier-III cities and beyond are less likely to use WhatsApp for payments. That’s also because, unlike its large competitors, WhatsApp doesn’t offer cashback and other add-on services as incentives. “Even if they build out certain use cases, still daily active users on other platforms are far too much. So, I don’t think WhatsApp would be in a leadership position,” said Gupta. However, it might be too early to call any winners in the UPI space. WhatsApp still owns the Bharat behind India, and their entry is a significant tectonic shift that might unlock a lot of disruptive value in the long term. It is precisely because of their scale that this value potential exists.
Paytm continued to remain the distant third player in UPI transactions in February 2021.
Paytm on Monday announced that its payment gateway is the largest processor of business payments with over 750 million monthly transactions now. Adoption of online payments for sectors such as BFSI, retail and direct-to-consumer (D2C) e-commerce, utilities, edtech, food delivery, digital entertainment, gaming and online shift of businesses during and post covid times had enabled growth for the payment gateway even as its transaction volume had long surpassed pre-covid levels, the company said in a statement.
Adoption of payment instruments issued by Paytm Payments Bank, including Paytm Wallet and Paytm UPI contributed about 60 per cent to the total transactions registered on the gateway. Also, Paytm PostPaid and EMI services which were launched last year registered 25 per cent month-on-month growth, Paytm said. “Our systems have the capacity to manage up to 2,500 transactions per second which ensure stability when our enterprise merchants see spikes during special events and sales,” said Praveen Sharma, Sr. Vice President, Paytm.
According to RedSeer’s August 2020 report on digital payments in India, Paytm is the largest player in the merchant payments space with a 50 per cent market share followed by Phonepe and Google Pay. However, as per the monthly UPI transaction data from the National Payments Corporation of India (NPCI), Walmart’s payment arm in India PhonePe continued to remain the dominant UPI app for a third straight month in February 2021, cornering an impressive 42.5 per cent share of the 2,292.90 million UPI transactions.
Paytm remained the distant third player in February as well recording 340.71 million transactions involving Rs 38,493.52 crore. It had processed 332.69 million transactions worth Rs 37,845.76 crore in the preceding month. Google Pay, which had lost the top spot to PhonePe in December 2020, had retained the second-largest UPI app in February processing 827.86 million transactions worth Rs 1.74 lakh crore.
India’s digital payments are likely to grow at a CAGR of 27 per cent during the FY20-25 period. The digital transactions are expected to jump from Rs 2,153 lakh crore in FY20 to Rs 7,092 lakh crore in FY25, according to the India Trend Book Report 2021 launched last week by the Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young. The payment gateway aggregator market is expected to grow at around 19 per cent CAGR from Rs 9.5 lakh crore in FY20 to Rs 22.6 lakh crore in FY25 while the merchant payments segment is likely to see 52 per cent growth from Rs 4.7 lakh crore to Rs 33 lakh crore during the said period.
The maximum growth is likely to be witnessed in the mobile payments segment at 58 per cent from Rs 25 lakh crore to Rs 245 lakh crore.
The nascent yet fast-evolving digital payments industry in India, propelled by policy framework and technology penetration, is expected to grow at a compound annual growth rate of 27 per cent during the FY20-25 period. The growth in retail electronic payment systems including National Electronic Fund Transfer (NEFT), mobile banking, and development of payment acceptance infrastructure is likely to boost digital payment transactions from Rs 2,153 lakh crore in FY20 to Rs 7,092 lakh crore in FY25, according to the India Trend Book Report 2021 by the Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young.
The digital payments market, which has been led by companies such as Paytm, PhonePe, Pine Labs, Razorpay, BharatPe, and others on the B2C and B2B sides, has surged expeditiously with businesses offering cash backs, rewards, and offers to woo customers. Moreover, the recent pandemic has stimulated the demand for digital wallets as contactless payment is reckoned as the new normal protocol. Policy frameworks, on the other hand, such as Pre-Paid Instruments (PPI), Universal Payment Interface (UPI) by the NPCI apart from Aadhar, and the launch of BHIM-app have driven the financial inclusion and improved the payment acceptance infrastructure in the country.
In terms of segment-wise growth, the payment gateway aggregator market is expected to grow at around 19 per cent CAGR from Rs 9.5 lakh crore in FY20 to Rs 22.6 lakh crore in FY25 while the merchant payments segment is likely to see 52 per cent growth from Rs 4.7 lakh crore to Rs 33 lakh crore during the said period. The maximum growth is likely to be witnessed in the mobile payments segment at 58 per cent from Rs 25 lakh crore to Rs 245 lakh crore.
Meanwhile, the overall fintech market, which also catered to online lending, wealth management, insurance technology, etc., is likely to grow from Rs 1.9 lakh crore in 2019 at a CAGR of 22.7 per cent during the period 2020-25. While some fintech subsectors such as MSME digital lending have been facing temporary downturn, others including digital payments and insurtech have benefitted from Covid-induced digital adoption among consumers. According to the IVCA report, India has emerged as Asia’s biggest destination for fintech deals, leaving behind China in the quarter ended June 2020. Amid COVID-19, India saw a 60 per cent YoY increase in fintech investments to $1.5 billion in 1H20.
“Covid-19 pandemic has accelerated the shift toward a more digital world. It has changed the ways businesses were done and technology is at the forefront of these changes. Opportunities for internet and tech companies have increased multifold in the last one year. Wide penetration of internet and lower internet cost has complemented the digital and technology trend for consumers and have changed the ways of shopping, education, agriculture, retail, logistics, finance, health, etc. businesses,” said Ankur Bansal, Co-founder and Director, BlackSoil.
UPI transactions had exited 2020 with the Rs 4-lakh-crore value mark in December.
Unified Payments Interface (UPI) transaction volume and value have witnessed a contraction in February 2021 — the first time since April last year. From 2302.73 million transactions involving Rs 4,31,181.89 crore processed in January 2021, the number of transactions declined to 2,292.90 million worth Rs 4,25,062.76 crore in February 2021, according to the data from the National Payments Corporation of India (NPCI). UPI transactions in April last year had declined to 999.57 million amounting to Rs 1,51,140.66 crore from 1,246.84 million transactions worth Rs 2,06,462.31 crore in the preceding month.
However, the year-on-year growth in UPI transactions stood at 73 per cent in February 2021 even as the value nearly doubled by 91 per cent. February 2020 volume stood at 1,325.69 million transactions worth Rs 2,22,516.95 crore. The number of banks going live on UPI also increased from 146 in February 2020 to 213 in February 2020. UPI transactions had ended 2020 on a high note with the total value storming past the Rs 4-lakh-crore mark in December to Rs 4.16 lakh crore across 2,234.16 million transactions.
While the NPCI is yet to release bank and app-wise data for their February UPI transactions, Walmart-owned PhonePe had remained the leading UPI-app in terms of volume and value in January 2021. The company had processed 968.72 million transactions involving nearly Rs 1.92 lakh crore. In fact, PhonePe’s volume was over 100 million transactions higher than Google Pay’s 853.53 million transactions worth Rs 1.77 lakh crore. On the other hand, Paytm Payments Bank had remained the distant third player with a volume of 332.69 million worth Rs 37,845.76 crore. The combined transaction volume of the three leading UPI apps stood at 93.5 per cent share of the total January volume of 2,302.73 million while the value share stood at 94.5 per cent of Rs 4.31 lakh crore.
Importantly, among India’s top 30 UPI remitter banks witnessing UPI transaction failures due to technical reasons, public sector lender Union Bank of India had the highest failure in January. From 10.75 per cent technical decline (TD) in December, the failure rate jumped to 12.89 per cent in January for Union Bank of India. Andhra Bank and Indian Bank recorded the second and third highest TD rate of 10.40 per cent and 9.83 per cent respectively in January.
UPI is currently the biggest among the NPCI operated systems including NACH, IMPS, AEPS, BBPS, RuPay, etc.
UPI transactions ended 2020 on a high note. The value for digital transactions done via UPI stormed past the Rs 4-lakh-crore mark in December, according to the latest UPI data from the National Payments Corporation of India (NPCI). 2.23 billion transactions worth Rs 4.16 lakh crore were recorded in December, up from 2.21 billion transactions involving Rs 3.91 lakh crore in November. The year-on-year growth in volume stood at 70 per cent from 1.30 billion transactions while the value of UPI transactions increased 105 per cent from 2.02 lakh crore in December 2019. Moreover, the number of banks live on the UPI platform increased from 143 to 207 during the 12-month period.
Among the leading UPI players, Google Pay and PhonePe had together cornered over 82 per cent of the market by volume and over 86 per cent by value in November. While Google Pay processed 960.02 million transactions involving Rs 1.61 lakh crore, PhonePe, saw 868.4 million transactions worth Rs 1.75 lakh crore. Paytm had processed 260 million payments.
The transaction volume and value have apparently scaled up faster during the Covid and lockdown phases as people switched to digital mode to avoid cash usage. The volume jumped by 908.47 million transactions during the 10-month period from 1.32 billion transactions in February 2020, according to the analysis of NPCI data. However, in comparison, similar volume growth of 908.47 million transactions, before Covid, took 17 months (from September 2018) to reach the February 2020 level.
UPI is currently the biggest among the NPCI operated systems including NACH, IMPS, AEPS, BBPS, RuPay, etc. As of October FY21, out of 3.39 billion retail transactions on all NPCI platforms, 2.07 billion transactions were recorded on UPI followed by 340.03 million transactions with respect to NFS inter-bank ATM cash withdrawals, 318.97 million transactions on the instant payment inter-bank electronic funds transfer system — Immediate Payment Service (IMPS), and 245.55 million transactions on the National Automated Clearing House (NACH), according to the NPCI data.
Importantly, the Reserve Bank of India had on Friday launched a ‘composite Digital Payments Index (DPI)’ to measure the extent of digitisation of payments in India based on parameters including payment enablers, payment infrastructure – demand-side and supply-side factors, payment performance, and consumer centricity, according to the RBI.
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