A Bloomberg Asia column highlights the success of India’s faster payments platform, Unified Payments Interface or UPI, and how the combination of faster payments and digital devices can rival legacy card platforms. India’s electronic payments market is much, much smaller than the U.S. or China, but it is interesting to see how faster payments can add value when the market environment supports the adoption of these transaction types. The article claims that UPI payments now account for about half the volume that is conducted on debit and credit cards. It further suggest that UPI based payments are not just digitizing cash payments but actually taking some market share away from the card networks:
Transactions through India’s homegrown Unified Payments Interface — which allows mobile apps run by retailers, airlines and other firms to take payment directly from bank accounts — reached almost half the value of debit and credit cards swiped at stores last month, central bank data show.
Amazon.com Inc. and Jet Airways India Ltd. — the nation’s second-biggest airline by passengers — are among firms that have integrated UPI into their apps in order to take payment from customers. Ola, a local rival to Uber Technologies Inc., Big Bazaar, a chain of stores run by billionaire Kishore Biyani, and incumbent mobile wallet leader Paytm Mobile Solutions Pvt. are other users.
Facebook Inc. is piloting a payments service in India with a UPI backbone for its WhatsApp Pay, which has already drawn comparisons with the way WeChat reshaped payments in China.
This trend towards mobile payments has a lot of upside in India. There are still significant regions in India that are still building the infrastructure to support mobile, and millions of consumers who are not yet connected. It is no wonder there are significant investments taking place in India’s mobile payments future, such as Warren Buffett’s investment this week in Paytm. More on that topic here
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group