Google Pay has a solid lead over PhonePe, Paytm and Amazon Pay⁠ in India⁠— but its biggest challenge is yet to come

• According to a report by Bernstein, in the month of May 2020, Google Pay led the payments market in India, followed by PhonePe, Amazon Pay, Paytm and then Whatsapp Pay.
• Google Pay had 75 million transacting users in May, while PhonePe had 60 million users and Paytm had 30 million.
• Google Pay’s operational validity as a third party app is currently under scrutiny in the Delhi High Court.

Google Pay has taken a comfortable lead in India’s payments market over rivals like PhonePe, Amazon Pay, and a one-time market leader, Paytm. However, for Google, the up and coming WhatsApp Pay may prove to be the real challenge.


However, according to reports, Google Pay had 75 million transacting users in May, while PhonePe had 60 million users and Paytm had 30 million. Paytm has been facing the pressure from competition as according to reports, its monthly active users in December 2019 too were at 40 million, down from 45 million a year earlier.

Paytm reached out to Business Insider to say that "Paytm Wallet & other payment methods (net-banking, cards, IMPS etc) available on our app has continued to grow and we register a huge number of transactions. Overall, Paytm continues to dominate digital payments and has over 50% market share of mobile payments to merchants. We have the largest offline merchant network in the country with over 17 million merchants." The spokesperson added that "Paytm has over 10 million daily transacting users and our overall user base is much more than the combined UPI base of all players."

According to the TechCrunch report which cited data from National Payments Corporation of India, Google Pay had 540 million UPI transactions, PhonePe had 460 million while Paytm saw 120 million. Another report said that Amazon Pay too had ramped up its operations and saw 60 million UPI transactions in May. According to NPCI, the total UPI transactions in May hit 1.23 billion.

However, Paytm has clarified that " UPI consists of just a minor percentage of all digital payments happening in the country. The largest majority of payments is made on wallets, cards, and net banking."

PhonePe, which claims to have 200 million registered users, has been slowly increasing its merchants user base as well and now has over 10 million merchants onboard. It has also diversified to financial services and offers travel insurance as well.

Meanwhile, Amazon Pay too is offering more to users. In April, it launched the pay now, buy later option for its users.

WhatsApp will be the real challenge for Google Pay

But the next big challenge will come from Facebook;s WhatsApp, which has 400 million monthly active users in India – thanks to the Reliance Jio-Facebook deal. Analysts at Bernstein expect WhatsApp Pay’s penetration to increase to 30% (from the current 10%) by FY25.

WhatsApp Pay has been in the testing mode in India since 2018, and has been caught up with regulatory hurdles. But its bank of already existing users (through WhatsApp), will make it easier to conquer the market. And that is visible already.

According to Bernstein’s hypothesis, WhatsApp has already garnered 10.7% of the market in the first phase of rollout since the approval came in February. The subsequent phases will be much bigger and a lot more competitive.

“Payments remains the missing link, the tie up could be a potential game changer with WhatsApp Pay integration with JioMart,” said the report by Bernstein.

Paytm already has plan B, C and D

Once, not very long back, the leader in payments, Paytm’s parent company One97 communications has now forayed into a bunch of new businesses.


“One97 communications as a whole registers 700-800 million transactions,” a source told Business Insider in April.

The $16 billion Paytm’s founder Vijay Shekhar Sharma also remains confident. “One of the most important KPIs for us is what’s the percentile of the market of people that is using Paytm. Our philosophy is User - Transaction - Dollar - Delta. User-wise, we remain a high percentile owner,” Sharma told Business Insider in an interview in February.

Google has its share of challenges

Meanwhile, Google Pay which added nearby stores feature and expanded it to 35 cities, and partnered with hyperlocal delivery app Dunzo in May, also has troubles in hand.

Google Pay’s operational validity as a third party app is currently under scrutiny in the Delhi High Court. If Google Pay is a “full-fledged payment system provider” it will be a violation of Payment Systems Settlement Act 2007. However, the Reserve Bank of India has told the HC that it recognizes Google Pay as a third party app provider (TPAP).

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