But coming into the UPI payments space a little more than a year late, Google has demonstrated that there still is space for growth in India’s digital payments ecosystem. Tez also sets the precedent for Google to invest in more region specific products, which it has rarely done before.
“We see a way to look at these markets with a lot more thought and address them for the opportunity that they have, not just apply our global products there. So I think that's what led us to do Google Tez in India. And we'll thoughtfully look at the opportunities in that region and invest a lot in the years ahead,” added Pichai.
Analysts say that despite the digital payments space in India being somewhat crowded, the massive opportunity that India offers ensures there’s still enough room for growth of new players. Also, changes in regulations have helped UPI become the preferred mode for P2P and P2M payments, since unlike other modes transactions remain free.
Google might be the first global technology
giant to get into India’s fast-growing digital payment space, but other heavyweights such as WhatsApp, Facebook and Apple are on their way.
“Sometimes, there is a late-mover advantage as well when the technology
or concept is emerging and one can learn from other’s mistakes. The Indian market has huge opportunity and despite the presence of a number of players it is hugely untapped,” said DD Mishra, Research Director Gartner.
While on the surface Google’s Tez might seem similar to the BHIM app, the company has brought a number of new features to the table. Google Tez is the first app that uses multiple banking partners to power its UPI service, it has a cash mode that uses unique audio frequencies to pair two nearby devices to enable payments. Google’s Tez Shield that is powered by machine learning to detect fraud is another feature that quells a user's fear of losing money.
“Users are finding the Audio QR / Cash Mode transaction very easy to use. Audio QR usage is five times of the normal QR codes on Tez. Given the high merchant adoption of UPI, we’re seeing users use Tez for paying for their daily transits, food and entertainment, grocery payments and high value transactions like rent, and flights,” said Diana Layfield, Vice President, Product Management, Google.
Layfield notes that India is unique in providing an interoperable network for payments within bank accounts, giving the company the chance to build a product specific to India.
Prior to the launch of Tez, analysts had voiced their doubts on the success of an Android Pay type of service in India. However, with Google forgoing the use of near field communication (NFC) based systems given its low acceptance at terminals and lack of affordable smartphones with the technology, and instead creating solutions that will work in India, analysts are now seeing possibilities of success.
Google’s Android operating system powers over 95 per cent of smartphones in the country and its Search, YouTube, Gmail and Maps services are among the highest used by customers in India. With reach not being a problem for a giant like Google, it could give local players such as Paytm, PhonePe and Axis Bank owned Freecharge a run for their money.
“The best way to tap the evolving market is to bring something which is aligned to the current level of maturity and requirements addressing the existing gaps and taking advantage of the differentiation. Once the market is ready for adoption of Android Pay, it will become easier for Google to capture the market share and mind share by that time,” added Mishra.
Despite everything Google brings to the table, competition in the space isn’t going to get easier. Flipkart has committed to invest $500 million in PhonePe, Paytm has raised nearly $2.5 billion so far, and the BHIM app is now being promoted through a massive planned advertising campaign sponsored by the government.