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Why Google Pay is losing its market share?

Updated: Feb 5, 2023

Indian tech payments giant, Google Pay is facing repeated shutdowns and it is affecting its consumer base.

What is happening: It’s been a tense week for those at the India division of payments giant Google Pay.

  • Google's parent, Alphabet recently parted ways with 12,000 employees on a global scale, worrying the staff spread across India and Singapore, are bracing for the cut.

Why it matters: Google Pay India is one of the few payments teams globally with end-to-end autonomy—a distinction that sets it apart from other geographies.

  • Despite an exalted status globally, Google Pay India’s fate remains uncertain which is partly rooted in a recent shift in product strategy for Google Pay Brazil.

Backdrop: This shift comes when India’s real-time digital payments system, the Unified Payments Interface (UPI), is flourishing at a ~70% monthly growth rate.

  • It lost the top spot to PhonePe, and the distance has only widened since.

The big picture: The major factor weighing down Google Pay is its increased reliance on big Indian banks serving as its tech partners.

  • As the payments landscape readies for credit cards on UPI, maintaining deeper relationships with merchants and retainining consumers is its new challenge.

The bigger picture: Google Pay put up somewhat of a fight to secure offline merchants but it abstained from acquiring online merchants until late 2022.

  • Had they acquired them earlier, Google Pay would have been able to get in the thick of the money flow, enabling quicker settlements for merchants.

  • Probably delayed due to significant investment on google pays part is likely that Google Pay avoided this path because online merchants require a significant amount of support from payments providers, as they rely heavily on digital payments.

By the numbers: To retain loyalty, Paytm in 2019 launched the SoundBox, a hardware made to enable merchants to know when a payment is received.

  • Then in the year ended March 2022, Paytm made 38% of its revenue of ~Rs 5,000 crore (~US$610 million) out of services.

What's next: Google will need to reinforce its position not just within Google, but also in India’s payments ecosystem, once again.

Catch up Quick: Google Pay is now in a precarious position and needs to fix its standing and retain its consumer loyalty to stay stable in the current economic situation.


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