Google Pay is a digital wallet platform and online payment system developed by Google to power in-app and tap to pay purchases on mobile devices. Google Pay enables its users to make payments with their android devices (phones, tablets or watches), the users in the United States can use Google Pay also iOS devices but with limited functionality.
In addition to this, the service also supports passes such as coupons, boarding passes student ID cards, event tickets, movie tickets, public transportation tickets, store cards and loyalty cards. It can be used for online payments, in-app purchases, contactless payments in stores and even for sending peer-to-peer money. Whether someone is browsing for a new pair of sneakers online or buying your morning coffee, Google Pay can do all the heavy lifting for them.
Google Pay has several global revenue-making opportunities. The revenue might be both from transaction fees from banks or merchants which is $4.1 billion and also from ads and product offers within Google pay which is $0.4 billion. Let's look at the business model of Google Pay to understand how it makes money.
Google Pay Business Model
Google Pay has been consistently rising in India, The Alphabet and Google CEO- Sundar Pichai said that the company has taken cues from the successful experience in the country and would soon put out a revamped digital payments product globally. Compared to the other mobile wallets Google Pay is successful in India because of its business model which includes the following factors.
Google Pay focuses on partnerships, localization and ecosystem approach as it forged deep partnerships with the central bank and government to innovate and build collectively and made products interactive and open to working jointly within the ecosystem.
The company deepened its support for small businesses through a new app called Google Pay for Business which was a free and easy way for small merchants and storefronts to enable digital payments without the hassle of a time-consuming verification process.
Google pay also supports job seekers by introducing a spot on Google pay to help people find entry-level positions that aren’t always easily discoverable online.
It collaborated with the Government to come up with Digital Payment Abhiyan for increasing awareness about cashless payment and online financial security in the country.
The company also launched the Vodafone Idea Phone Line to help people in the rural areas where the internet connection is weak in order to get information about everything.
Its entity-based UX users search for who they paid earlier rather than the transaction date and time. Under the entity-based model, users see individual chat leads of every individual or merchant, they transact with, whenever they have to check a payment record.
Google pay introduced the spot platform in India which is a way for the business to create an experience and engage their customers within the Google Pay app. Popular services like UrbanClap, Goibibo, MakeMyTrip, RedBus, and Eat.Fit and Oven story was the first to board in its early access program.
Scratch cards are another attraction as Google Pay provides lucrative cashback and offers on varying transactions. These cash backs are directly credited to a linked bank account. The app also provides multiple payment options so users can transact through their mobile numbers and Virtual Payment address.
Google has written to the US Federal Reserve Board detailing the successful example of UPI-based digital payment in India to build "FedNow" a new interbank real-time gross settlement service for faster digital payments in the US.
The company plans to open a research lab focusing on artificial intelligence applications in fields like health care and education and offer public Wi-Fi to villages in three regions.
How Does Google Pay Make Money?
Google Pay was first launched in August 2017. Google first named this app Tej and later changed the name to Google Pay. As of 2017, Google pay is currently available in India, Australia, Canada, Japan, Russia, Singapore, Ukraine, the United Kingdom and the United States.
Google Pay does not charge its users for accessing Google Wallet. Receiving and sending money on Google Pay is absolutely free. Previously, the company had an agenda of adding a 2.9% fee to funds via debit card. Although, now the plan is dropped and it's all free as mentioned above. The app has enabled more than 2.5 billion transactions and currently has got a running rate of US $110+ billion in transaction value.
The app has over 67 million monthly active users and enabled more than 2.5 billion transactions and now has an annual run rate of over US$110 billion in transaction value. This app user can now pay at more than 200,000 stores in more than 3,500 cities and towns, and more than 2,700 online merchants. The Business Model of Google pay in 3 categories are:
- Mobile recharges – The basic revenue model of Google Pay is mobile recharges. Whenever a user recharges on any SIM operators from this app, then they get a commission from that operator on every recharge.
- Bill Payments – Google pay allows you to pay for pay any kind of bill from this app such as electricity, DTH recharge, water, insurance, loan repayment, postpaid bill, and so on. Whenever you pay any company bill, it takes a commission from that company.
- UPI Transaction – So this app does not earn from the UPI transactions, they just analyze your transaction data, which they use to make their new product. The main reason for most people to use Google pay is app for UPI payments. The app also provides more services such as mobile recharge, bill payment. So when people have to use either or both of these services, they use this app and this app earns from both the services.
Growth of Google Pay in India
Google mobile payment system Google Pay has emerged as the king of UPI payments in India, with annualized transaction value worth $110 billion. Google pay has 150 million monthly active users. According to the RBI data, the total value of mobile wallet payments was Rs 1.84 lakh crore in the last financial year 2018 to 2019.
In India, Google Pay is the single largest UPI payments player in India with a 60% market share. The app resembles a chat app that is easy to use and is available in local languages.
The platform is used by customers for buying train tickets, paying bills and even purchasing lunchtime meals from street vendors. In India, local stores have begun to accept Google pay payments via a phone application. Meanwhile, Google Pay platform’s update includes features like tokenized cards for more secure payments, food security, google pay for business, e-KYC and simpler onboarding and donations.
In India, Google Pay is facing stiff competition from other fintech startups including wallets such as Paytm, PhonePe, Amazon Pay and Airtel payments Bank etc. The upcoming contender in the race is the Whatsapp Pay service by Facebook.
Funding Received by Google Pay
Founders of Google Pay in India raised $13.2 million in January 2020 in a Seed funding round for its neobank, Fi led by Sequoia India and Ribbit capital. Also participating in the funding rounds were David Velez, Kunal Shah and VC fund Hillhouse Capital.
Recently in October 2020. The investment app, ETMONEY, has partnered with Google to offer Google Pay users a route to invest in mutual fund schemes and the National Pension System (NPS).
This collaboration will allow Google Pay users to identify the right mutual fund schemes and invest in them within minutes using their Google account and Unified Payments Interface (UPI) ID.
Google Pay users will not have to create a user ID to access this facility. It will be the same if one wants to invest in NPS as well. Sujith Narayanan and Sumit Gwalani, both co-founders of Google Pay India formerly called Google Tez said that the seed funding brings the neobank startup Fi to a valuation of roughly $50 million.
What is the revenue of Google Pay in India?
Google pay revenue in India was INR 1467 crore in 2021.
How many people use Google Pay worldwide?
Google Pay has 150 million users worldwide.
How does Google pay make money?
Google Pay makes money through commissions it gets for transactions from companies or operators. For every transaction that you make using Google Pay, it gets a commission from the company.
Who are the competitors of Google Pay in India?
Top Competitors of Google Pay in India are:
- Amazon Pay
- Whatsapp Pay