PhonePe is citing data to argue that merchants should pay for UPI transactions

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PhonePe is citing data to argue that merchants should pay for UPI transactions
PhonePe founder Sameer Nigam and Karthik Raghupathy, head of strategy and investor relationsPhonePe
  • PhonePe has opened its data bank for everyone with the launch of its latest product called Pulse.
  • The company’s CEO Sameer Nigam noted that 90% of PhonePe’s transactions are UPI-based, so they are not allowed to charge commisions on it.
  • Interestingly, PhonePe is the biggest player in the UPI market with control over 45% transactions on a monthly basis.
Walmart-owned digital payment firm PhonePe on Thursday, September 2, opened its data bank for everyone with the launch of its latest product called Pulse.

Pulse — available as a website and report — will give deeper insights into PhonePe data across payments and financial services.

The platform as well as the report will be updated quarterly with latest insights about PhonePe’s transaction value and volume, financial services sold on the platform and more. This product includes PhonePe data bank in anonymised format.

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Users can check out the data at Pulse.phonepe.com

Key takeaways from Pulse
PhonePe has processed over 2000 crore transactions to date.
The company has its presence spread across 300 million users in 19,000 pin codes.
Over 63% of first time transactions on the PhonePe app are to transfer money, confirming that this category acts as the initial hook for customers to download a unified payments interface (UPI) app.
The Walmart-owned company processed nearly 400 crore transactions worth ₹7.4 lakh crore in the April to June quarter of 2021.
Last quarter it reported nearly 150 crore merchant payments and 174 crore peer-to-peer payments.
Sameer Nigam, founder and chief executive (CEO) of PhonePe, believes that such a data bank could actually lead to some conversations among policymakers and bring about a change in the digital payments network.

The major change that any fintech player like PhonePe is looking for is being able to make money out of UPI transactions. This is because it's the largest digital payments format, which witnessed 3.5 billion transactions in August 2021.

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Currently, the Indian government has banned payments players from charging customers/merchants on UPI transactions. Although, the same players can charge on other non-UPI digital transactions like card payments or wallet transactions. This is known as the merchant discount rate (MDR), which is a fee paid by merchants to accept payments.

Nigam, in the Pulse launch event held on Thursday, highlighted that currently 85-90% of PhonePe transactions are carried out using UPI that has "zero MDR".

For perspective, PhonePe actually processed nearly 400 crore transactions worth ₹7.47 lakh crore in the April-June quarter of 2021. A 90% rate would be that PhonePe did not earn any money over 350 crore transactions.

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“It is our hope that if more and more data is transparent, policymakers will see perhaps on a lifecycle, but they will clearly see implications of decisions. For example, like zero MDR. I do believe that it limits market participation. NPCI data shows the number of participants in the market has come down by almost two-third from 45 companies that were processing UPI to and now the number on NPCI websites is 15,” Nigam said.

“I think it will start a lot of conversation,” he added.

Despite being the biggest player in the India UPI market — with a market share of 43-45% on a monthly basis — PhonePe reported a revenue of ₹371.8 crore in financial year 2020. This was almost double of the number it showcased in FY2019. Meanwhile, sources in Paytm say that they earn about INR 1,700-₹1,800 crore through digital payment.

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At that time, the company was processing about 800-900 million UPI transactions on a monthly basis. Currently, it’s at 900 million to 1 billion monthly, as per National Payments Council of India (NPCI).

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