UPI ecosystem needs to be sustainable to grow further: Google Pay

Hints at the need to make transactions on the platform chargeable

Google Pay, the second largest payments platform, believes that overtime the Unified Payments Interface (UPI) has to be a sustainable ecosystem to grow further.

“Ultimately in some form UPI has to be a sustainable ecosystem. If UPI creates economic opportunity and adds value then it makes sense to have participants who are making it possible to create a sustainable business out of it,” said Sharath Bulusu, director, product management, Google Pay, when asked if UPI transactions should be charged. He was talking at the sidelines of Google’s flagship event Google for India.

Bulusu further added that as the ecosystem grows the cost of running such a system, such as the technical system, compliance, security etc. requires investment. And hence, in some form of the other making UPI sustainable is important.

Google Pay or GPay's market share for the month of November was 34.17 per cent in terms of the volume of UPI transactions.

When asked his opinion on the need for a volume cap by the regulator on players, Bulusu said, “The right thing at this stage is that the policies and incentives around it should be about growing it further. UPI, which looks like a large network, is still a baby in many ways. NPCI realises this and wants to build UPI which grows larger and stronger,” he added.

Earlier this month, the National Payments Corporation of India (NPCI) extended the volume cap deadline for third-party application providers by two years, until December 31, 2024. According to reports players had asked for a five-year extension of the market cap deadline and a review of the decision to impose market caps.

The top two players--PhonePe and Google Pay – corner 81 per cent share of UPI transactions in terms of volume.

When asked what differentiates Google Pay, Bulusu said it is the constant focus on making the platform safe for users' transactions. Bulusu says that sometimes having a desirable friction is an otherwise smooth financial transaction is healthy and safe.

“We are 5-year old now and what we are observing is that UPI is increasingly becoming a game of new users coming in who are not as savvy or comfortable with these digital tools as the early adopters were. That is why we are doubling down on efforts which make us pay attention to safety and keeping the users alert is important,” he told Business Standard.

He added that GPay continues to distinguish itself as it finds the right balance and hence having desirable friction is good. “Every product we built is built with the goal that it has to be done fast, make it easy to use, no friction at all etc. but Gpay is a place where we want those additional features, which makes you wait, and slow down the process,” he said.

Among the millions of transactions that happen on Gpay some of them sometimes could have been initiated by fraudsters. The safety engine looks at hundreds of signals that analyze the aggregate transaction pattern of millions of users. It also looks at graphs of billions of notes if a recipient has raised suspicious activity in the past. This gets updated regularly. If the algorithm finds a suspicious activity, it sends a message to the user in the preferred language. This is not all, sometimes the platform also uses haptic or a nudge for users to make sure that the transaction that they are about to make is correct.

“We want to grow in a responsible way. And as these new users come in, the only way that they will become as active as the user now is because of the trust with the platform,” he added.