Google Pay – The Road Ahead in India

Indian banking system is quite unique in ways beyond one can expect. Though rated as a developing nation, the banking systems in India are quite intuitive and advanced, all thanks to having a majority of the population not equipped with skills needed to operate complex systems. Considering the large population that India has (2nd highest in the world but poised to be the most populated nation eventually), any product built aiming at Indian users mostly banks on high volumes and low margin strategy. UPI – unified payment interface, is yet another break through secure system implemented by NPCI that has witnessed phenomenal growth over the past 3 years.

Google has been the front runner in catering its users with one of the most intuitive apps that has been built on top of UPI systems to enables users for easy P2P transfers and later expanded to a foray of services. As with any growing trends, competitors soon caught up and now Google Pay is being challenged by PhonePe as well as Paytm for UPI payments. Though each one of them still has their own strong points let’s try to discuss the road ahead for Google Pay.

Essentials of a good product

Problem – Traditional banking systems and fund transfer methods such as cheques, NEFT, RTGS are plagued by issues such as necessity of complex payee details, delayed transfer process taking up to a few days and lack of internet banking accounts for most banking users making the whole process complex for most users.

Solution – an easy to use app that identifies payees from list of existing contacts or adding new payees being as easy as adding a contact in the mobile phone.

Product-market fit – Naturally exists in a market that transacts upwards of 7000 billion per day (as per RBI statistics). A market exists and any bit of convenience added to facilitate ease of transacting ensures a product-market fit of some sort. The success of the fit depends on the solution and has no finite way of measuring.

Uniqueness or value proposition – as GooglePay essentially relies on UPI, maintaining a uniqueness to create enough stickiness is mostly through core Google values of providing a self explanatory an intuitive UX and a clean and simple UI. Basically, ensuring the learning curve isn’t steep, to ensure it falls in line with the very purpose of using UPI in the first place. Apart from that, deeply integrating with other google apps such as Gmail, Google Assistant, service integrations etc. In a recent survey conducted in 2017, 46% of the respondents said they would not return back to a mobile website (can be assumed for app as well) that provides an interruptive mobile experience and 57% of users said they would not recommend a business with a poorly design mobile website.

Revenue model – data, data and data. Knowing how Google operates across its products the revenue model depends mostly on valuable data accumulated over time. With a dearth of data Google can start making sensible data models to partner with financial institutions, marketers etc. to create targeted value propositions for users. It all depends on the number MAUs Google can consistently pool up and retain.

Cost structure – cost incurred per transaction to be paid to banks (some sort of interchange fees), cost of user acquisition and retention including referral and other marketing fees and cost of developing and maintaining the platform.

Customer relationship – as the app handles real time banking transactions that are valuable to users, having a multi-layered customer support for easy and timely resolution is important. Having a mix of self help forums such as Google Groups for Google Pay, bot based auto-replies for mundane issues and then escalation to a customer care representative is quite essential both through app as well as on popular social media.

Issues currently being faced by Google Pay users in India

Let’s accept it, no app/platform/system can be made perfect, all one can aim is to ship out a functional MVP as soon as possible and iron out the issues as days go by. Upon researching various threads on Reddit, Quora and other public forums a certain set of recurring complaints are often found.

  1. Almost inexistent support – many users seem to complaint about delayed support, which almost feels as an inexistent at times. Need more robust and multi layered quick resolution system as discussed above in “Customer Relationship”.
  2. Failed attempts – Google Pay fails to make a successful connection in first attempt leading to transaction failures.
  3. Failed payments – Google Pay deducts money at times from origin account but shows transaction as failed.
  4. Delayed payments – amount deducted from origin bank account but does not reflect in destination bank account (or) does not get a confirmation from destination bank account leading to delayed confirmation of payment. Users at times repeat the transaction for immediate payments and eventually end up with two successful transactions when the first transaction gets a response at a later point of time.
  5. UPI limits – some banks seem to impose a stringent UPI limit for 3rd party apps such as Google Pay. For example, ICICI has a limit of Rs. 25000 per day for Google Pay users whereas it’s own app has a daily limit of Rs. 1,00,000.

New features for user acquisition and stickiness for existing users

Google Pay has a dominant position in the market, thanks to the first mover advantage of Tez to captivate the P2P money transfer market using UPI in a market saturated with mobile wallets. Rest of the competition followed Google Pay after witnessing the success of UPI based P2P money transfer system. It’s a brilliant move by Google, in a country where contactless or NFC based payment terminals hardly exist it would have been difficult or almost impossible to build a market base using the Google Pay app that works in western countries which primarily exists for mobile payments at PoS terminals. Also, irrespective of how creative and heavily funded marketing campaigns are bombarded, creating a market base in an inexistent market that doesn’t have the necessary support structure set in place would have been difficult.

Right now, Google Pay positioned itself as a P2P money transfer app, then later expanded towards bill payments and now are on-boarding merchants by tying up with Pine Labs with mobile PoS solution. How brilliant can this get? An excellent road map that works well to acquire users and expand feature base.

Any product/platform would accept the fact that having a predominant position in the market is difficult due to the low loyalty shown by customers. As much as it is important to launch revolutionary/evolutionary features to attract new customers, it is equally important to create more value for existing users by refining existing features. Below, we discuss various new additions to existing Google Pay app to acquire and retain users.

01. Some way on proceeding with payment when active data connection is lacking.

With the patchy data connections we often have, it’s a good added advantage if Google can implement an in-app encrypted SMS based payment system for Google Pay.

NPCI has a special feature for MTNL and BSNL customers with a special USSD code of *99# for UPI based payments as well. Integrate this USSD code into Google Pap app and help create a visual interface within the Google Pay app to proceed with transfers by using the USSD code. As much as possible, the user should be able to proceed with the same flow to make payments in the app but Google Pay needs to rely on USSD codes internally to complete the transactions when an active data connection is lacking.

Example: Raghu has to send Rs. 500 to Divya for shopping and starts the general flow of making payment on Google Pay. But after clicking on the pay option and then entering the amount the app automatically detects that there is no active data connection and prompt user requesting to continue further using USSD code. Upon confirmation, the app proceed to make payment via USSD code by converting the request to apt USSD code.

If the mobile number of Divya is 9845456 then the USSD code would be *99*1*1*9845456*500*shopping#, this will directly request the user to enter the UPI pin of the bank account. Once the UPI pin in entered the transaction goes through.

Decoding the above USSD code

*99# – initiate transfer process

1 – send money

1 – mobile number

Enter mobile number followed by *

500 – amount to be transferred

shopping – a remark automatically captured from the remarks field of Google Pay amount transfer in previous step.

02. Incentivise failed or delayed transaction rather than for referral. Good chance to create stickiness by gaining user confidence for existing users.

As discussed, it’s as important to retain existing users as to onboard new users. One of the major complain that users often have is about failed connections that require repeated attempts. The failed connection might happen either from the bank’s end or due to the complexities involved for a 3rd party UPI transfer app that adds layers on top of banking APIs, just as Google Pay does.

By incentivising failed/delayed transactions it’s easy to gain user confidence.  If the transaction fails, they get some rewards, if the transaction proceeds without issue more confidence is instilled.

03. Browser save for autosave details just as passwords are saved. We can save google pay UPI VID in browsers, chrome to begin with.

Thanks to the ever growing banking accounts and 3rd party UPI apps, it’s often difficult for users to remember their UPI IDs unless they use it quite often. Would be a nice nifty feature to enable browsers to save UPI VID just as it saves credit card details lately. A sample screenshot on how it might look like on mobile browsers/apps.

04. PoS machines for money withdrawal from Google Pay, will especially be useful in tier 2, 3 and 4 villages/towns

Following the recommendation given by the special committee appointed by NPCI to promote usage of digital transactions in the years to come, one of their recommendations is to convert the mobile PoS systems across India to enable them to act as micro ATMs. With Google Pay partnering with Pine Labs and subsequently gaining access to 3,30,000 PoS terminals across 3000 towns in India, Google can take charge to directly implement this feature.

Every PoS terminal has a unique ID, Google Pay and Pine Labs can together implement a simple encrypted QR code system with a sticker fixed in the store using this PoS (which they will already to I presume) to uniquely identify the store. Google Pay should have a feature that enables user to request withdrawal of money from micro ATM with certain limits. Once user requests for it, all he has to do is to enter the bank account’s PIN and it sends a confirmation to the PoS terminal that prints the receipt automatically and the storekeeper hands over the cash. As there are certain charges incurred, Google Pay can restrict to a maximum of Rs. 1000 per transaction for withdrawal and Rs. 3000 per month overall across 5 transactions.

05. Merchant referral program.

Existing apps that lead the digital payments industry for merchants either involve a mobile wallet (Paytm) or have no dedicated PoS device. The standard set of issues faced by merchants right now are

i) Wallet limit per month for KYC and non-KYC accounts.

ii) Transfer charges from wallet to bank account for merchants. Generally lot higher than merchant discount rate (MDR).

iii) Inexistent PoS device and reliance on a mobile phone based notification that doesn’t instil confidence. This makes it difficult for dispute resolution as well.

With Google Pay trying to rope in merchants in collaboration with Pine Labs, it enables a direct bank to bank transfer with a possible pooling account as an intermediary thus removing the need of a mobile wallet and high transfer charges for mobile wallets. Also, the PoS terminal provided by Pine Labs can help print a receipt of approval for transactions thus providing confidence to both buyers and merchants together.

Google can implement Merchant Referral program for existing merchants to recommend and onboard new merchants onto the Google Pay bandwagon. The benefits for every successful referral can range from MDR fee waiver for a certain duration for PoS service and bank transfer of amount settlement to cash benefits for transaction value generated for a certain duration.

06. A recommendation engine that helps cross sell at mobile PoS with contextual and personalised coupons by understanding user behaviour. This can be done by printing deals in receipts or by notifications in google pay app. 

Traditional payment systems lack efficient user behaviour tracking as there are no seamless ways of correlating different payment methods a user uses without violating privacy of the user. A user might possess multiple credit cards, bank accounts, debit cards, mobile wallets etc and each and every payment method has its own set of transactions and activities.

The advantage Google Pay has over any of these payment methods is a combination of various debit/credit cards that might be stored for PoS transactions or the current scenario of relying only on UPI transactions. Having more rich data will help Google analyse user patterns and behaviour better to provide personalised experience in terms of more relevant payment method selection while making a transaction, offers that are user specific etc. Such personalised offers can either be printed on PoS receipts or be provided as a notification in Google Pay app.

07. Implementation of loyalty program like in Paytm for encouraging recurring payments for single type of bills to encourage recurring payments. A good for user retention/stickiness.

It’s quite difficult to have a loyal base of users, especially when there is so little a 3rd party bill payments app can do to differentiate from the rest. Google’s strong point across most of its products has been the self explanatory UX that enables any user to start using the app but then, deal scouters will jump on to a new app if and when they find a better deal. One way to create more stickiness to retain user for a longer duration is to reward users for repetitive bill payments.

As of now, Google rewards users with a random denomination of money upon payment of bills which is in no way related to the previous payments. If Google can reward users incrementally for making more bill payments, users will have an incentive to make more bill payments. Some nifty little reward system such as extra scratch card for every 2nd, 5th and 10th transaction of similar type. Paytm does this and it seems to be a good way to retain users for a longer duration.

Apart from retaining users for a longer duration, it helps create a certain ease and acquaintance towards the app which might help retain users later as well even when there is no rewards system in place for later transactions.

08. Automatic bill payment reminders

Apart from setting alerts with due dates for previously paid billers on Google Pay, it can integrate bill payment reminders into the app by retrieve due dates from emails received on linked gmail ID regarding reminders and billing information for new billers as well. In fact, Google Assistant does this already to build cards with billing information.


On Google Assistant, while it builds a card with bill due date reminder retrieved from emails on linked Gmail ID, it can have a feature incorporated to automatically match to list of billers available on Google Pay and then prompt user to add biller or pay bill on Google Pay for the first time. That biller can be tracked on Google Pay later.

Along with that, as Google Pay would be able to uniquely identify billers, it can prompt users along with a matched best offer to make the payment as well.

09. Associate Google Pay name with name in contacts on phone.

One feature I find lacking is associating the contact name with a registered payee name in Google Pay. Users are often used to searching a contact by the name in the contact book, as Google Pay has access to contacts on device it would be useful to implement a user search either by name present in contacts or by payee registered name.

Example: If a user Mr. Mukhesh Mukherjee has been saved as Mukesh in the phone’s contact list, Google Pay should show the same result when searched even if the user searches for “Mukesh” as opposed to showing it only when search as “Mukhesh Mukherjee”.

10. Enable Google Pay payments for COD orders on e-commerce sites using QR code on delivery partner mobile app for easy implementation.

Most cash on delivery (COD) orders from reputed e-commerce website and their partner logistics companies are handled either by accepting cash or by few digital payment methods such as credit/debit cards. One thing in common for most logistics partners, either owned by the e-commerce company or by a partner service, is the use of smartphone to authenticate deliveries and contact customers.

Google Pay can have a partner app with a unique QR code integrated into the logistics company’s system to update payments made via Google Pay when the delivery is made instead of handling cash. There are many incentives for this for the logistics firm right from removing the risk of handling cash to easy consolidation of payments to generating easy reports on accepted payments via various channels and executives.

11. KaiOS – 100 million users and bottom of pyramid. A strong start if Google Pay is launched on KaiOS. Jio is on a rampage expansion and KaiOS is planning expansion in South American nations as well.

KaiOS, a little known mobile OS globally, is surprisingly the third largest mobile OS with over 100 million device base. In fact, Google is betting big for KaiOS to be one of the largest feature phone OS in the next few years and invested close to around $22 million to speed up the development, partnership and to integrate more Google services.

Though the largest user base in India is through JioPhone that has its own Jio Store for apps instead of Kai Store, Google can pretty much try and form a partnership with Reliance to push out Google Pay on JioPhones. Might be a tough task as Jio has it’s own grand plans to push out Jio PoS terminals across India and promote Jio Pay eventually. But Google being one of the main promoters of KaiOS and Jio relying a lot on KaiOS and Google services on KaiOS, it’s going to make sense to target the next billion users from the bottom of the pyramid to push out Google Pay to.

12. Having more users makes it cheaper to have a PoS for retails as it reduces the acquirer charges:revenue ratio.

Merchant on-boarding fee for existing MPoS systems range between Rs. 15,000 – Rs. 1,00,000 including hardware costs from vendors such as Nukka Shops, SnapBiz and GoFrugal. Having spent a fixed amount on the MPoS systems, any retail that can maximise the number of transactions will spread across the acquirer charges across a much larger revenue. Hence, adding more means of transacting using the MPoS systems will make the acquirer charges per transaction lesser making it more affordable to use the MPoS systems.

Adding Google Pay usage via Pine Labs PoS systems will indirectly also help Pine Labs push out more PoS systems to retails as the acquirer charges per transaction will be reduced for retails.

The road ahead for UPI and Google Pay

Given the current landscape for UPI and third party apps that rely on UPI, it’s quite essential to understand the roadmap laid out by the High Level Committee on Deepening Digital Payments appointed by NPCI and headed by their chairman Mr. Nandan Nilekani. After spending close to 5 months, they have pushed out an official report to the RBI with 73 recommendations on how to scale up UPI transaction usage by 10x and user base by 3x over the next three years. I will try my best to decipher each one of the relevant recommendation and pen down my opinion on how Google Pay could implement actionable suggestions to achieve higher MAUs, create better stickiness and increase average no. of transactions per user. The abridged versions of the recommendations from official report by NCPI has been published by Medianama, authored by Zaheer Merchant, and I am using the recommendations from that article.

Recommendation 1 of NPCI committee report:

Plan for 10x volume growth and 3x user growth in three years

UPI has been adapted at a staggering pace, in fact, it’s one of the fastest adapted financial technologies globally, accumulating over 100 million users and per capita digital transactions improving 10x from 2.4 to 22 in a span of 5 years. NCPI is aiming for a growth of 10x for volume of transactions with per capita digital transactions to hit 220 and user base to hit 300 million by 2022. Google has the potential to capture a huge base of the future digital payments users and to create more value to existing users to increase transactions volume.

I will discuss about new features and suggestions on improving existing features in the end of this blog post. These vary from expanding user base across new platforms to merchant on-boarding and incentivising.

Recommendation 6 of NPCI committee report:

Promote acceptance of digital payments.

Acceptance has to be promoted more with merchants than with users. Because of issues with high MDR charges, bank transfer charges from pooling account, cost of on-boarding and hardware fees for PoS, small merchants often shy away from using PoS systems.

Recommendation 8 of NPCI report:

Incentivise users to make digital payments

Discussed in point no. 2 and 5 above in “New features for user acquisition and stickiness for existing users”.

Recommendation 10 of NPCI committee report:

Ensure fast dispute resolution.

Discussed in “Customer relationship” of “Essentials of a good product”

Recommendation 12 of NPCI committee report:

Monitor transaction failures. Transaction failure monitoring and improving success rate

This will help introspect and improve success rate. Google Pay should collate and give data on success percentage for each banking partner along with statistics on various types of failures in comparison to average on google pay.

Recommendation 15 of NPCI committee report:

Educate users.

This will help fraud prevention. Pop up “Did you know?” tips randomly each time. Fill blank spaces of transaction pages with non-intrusive tips that can help educate users.

Recommendation 16 of NPCI committee report:

Prevent use of insecure devices

Devices such as rooted, non-password/biometric enabled etc should be discouraged from usage. Google Pay already does that on iOS, does not allow using unless a password of sorts is set.

Recommendation 17 of NPCI committee report:

Identify obsolete phone numbers in financial data bases.

Google can connect to its data base of phone numbers (already using for call screening and ID purpose) to filter out suspicious and defunct numbers

Recommendation 18 of NPCI committee report:

Create a centralised fraud registry for real-time rating of transaction.

Your response here

Recommendation 20 of NPCI committee report:

Enable a robust Cash In Cash Out (CICO) network.

Integrate pin labs PoS with such feature to enable users to take cash worth Rs. 1000 or so per day and Rs. 5000 per month from stores and that shall be adjusted to user’s balance in bank through connected PoS machines for a small fee. May be make it simple like scanning a QR code from google pay app special tab to request PoS money, confirmation at PoS and store hands over money. Distributed large network of ATMs.

Google Pay can tie up with banks as well to enable feature in ATM to enter virtual ID (UPI ID) linked to bank account and then help withdraw cash. Or display a QR code on ATM machine when a special button is clicked, enable withdrawal of Rs. 1000 pre day as limit and Rs. 5000 per month as limit.

Applicable more for tier 2, 3 and 4 cities

Recommendation 21 of NPCI committee report:

Spread best practices.

Auto reversal for failed transactions, keeping user informed on status for delayed or failed transactions. LEtting users knwo how much time it takes for update on issue etc.

Recommendation 22 of NPCI committee report:

Make B2B payments more software friendly. B2B support with lots of meta data to track and know what the transaction was for

More meta data. Something like what cashfree is doing (read report once again). Batch payments (save a set of users UPI IDs with fixed amount per user for daily wage etc and with a single click all payments to be implemented in queue). Reports for monthly payments with various useful stats by category and purpose etc.

Recommendation 23 of NPCI committee report:

Monitor progress with data.

Google Pay can access location data, build user base heat maps on which zones have most usage and which dont. Can be used to target users accordingly. Tier wise usage, targets etc.

Recommendation 24 of NPCI committee report:

The RBI must conduct periodic user surveys.

Location specific acceptance and opinion about digital payments.

Recommendation 28 of NPCI committee report:

Promote BHIM Aadhaar Pay to serve customers without phones.

Google Pay needs to find out a way to handle customers with feature phones and Jio Phone (KaiOS).

Recommendation 32 of NPCI committee report:

Promote digital payments at rural farmers markets.

Tier 3 and 4 penetration (Rural markets). Tough to educate but has high stickiness and loyalty.

Recommendation 33 of NPCI committee report:

Enable innovation for use of feature phones in digital payments.

Multiple profiles on a single app with login/biometric/pass code based login for each member of the family to use a single app on a device. May be limit to 4 accounts per device to limit abuse. May be use some sort of OTP mechanism to authenticate transaction. Registration with PoS terminal outlets for people without smartphones.

Recommendation 35 of NPCI committee report:

Technology must be made available to people with special needs and in Indian languages, to the extent possible. 

Integrate google assistant based transactions and in local languages. Local language support in apps. Google translate help.

Recommendation 40 of NPCI committee report:

Easier digital purchase of train tickets.

Enable more 3rd party purchase integrations such as train ticket bookings etc apart from existing ones. Toll booth payments too is a good use case.

Recommendation 41 of NPCI committee report:

Enable recurring payments.

Enable auto payments for bills/emis etc. Easy way to manage enabling/disabling this feature for bills/EMI. Something like cred does for credit card bills and paytm does for electricity bills, auto retrieval of bill details and alert user before due date. Check other points in notepad.

Recommendation 46 of NPCI committee report:

Standardise toll collection.

Some solution for easy toll payments and similarly for parking fee payments. Read more from main NPCI report, seems to be interesting.

Recommendation 48 of NPCI committee report:

ATMs should be complete digital facilitation points.

Apart from banks using their ATMs for digital facilities, Google Pay can enable mobile PoS system to withdraw money from any ATM as discussed in recommendation 20.

Recommendation 50 of NPCI committee report:

Review all high volume payment systems every 6 months.

Prepare a data pattern report of market dynamics, customer complaints, fraud patterns, decline rates and any other useful issues.

Recommendation 57 of NPCI committee report:

International transaction support

As Google Pay operates in international markets as well, they need to find out a way to do international transactions by creating API layers on top of existing bank APIs to facilitate equally easy international payments just like Google Pay does for domestic payments in each country.

Recommendation 58 of NPCI committee report:

Digitise citizen/business to government payments.

As Google is already working with Railways to enable WiFi in railway stations, need to find out a way to partner for Google Pay payments for all government bill payments. Read more in NPCI report to see what all use cases have been discussed.

Recommendation 66 of NPCI committee report:

Reduce charges on supportive hardware for digital payments. 

Google through it’s partnership with Pine Labs can make use of this facility to push more contactless payment terminals to merchants thus increasing merchant base that accepts contactless payments. This can help push Google Pay NFC based payments as in the USA.

Recommendation 67 of NPCI committee report:

PoS system import duty 18% to be waived off for 3 years.

Same as above.

Recommendation 68 of NPCI committee report:

Allow CSR spend on digital financial inclusion.  

No clue, read NPCI report to get more info, might help some way.

Recommendation 71 of NPCI committee report:

The government must disincentivse cash receipts.

Google Pay can incentivise cash receipts which it is already doing so and is the sole purpose of the app.