Magic of UPI; Transaction-service is free, yet payment apps are earning crores, but how? This information will shock you..
Unified Payments Interface (UPI) has created a stir in the world of payments. India's UPI service is popular not only in the country but also abroad. Just one click and a money transfer, that too free. Be it a tea stall or online shopping, apps like Google Pay and Phone Pay are everywhere.
Now the question is, if this service is free, then how are companies with UPI payment apps earning thousands and crores of rupees (payment apps earnings)? What is the secret of earning so much without selling anything? This question must have come to your mind at some point or another. So let's understand the whole story.
Business model based on trust, scale, and innovation
Apps like PhonePe and Google Pay earn from a special business model, which is based on trust, scale, and innovation. Regarding this, IC VC's founding partner, Mrinal Jhaveri, shared a post on LinkedIn.
In which he said that PhonePe and Google Pay earned Rs 5,065 crore last year, that too without selling any product. He told in detail about the earnings of these apps. These include facilities like grocery speaker, i.e., voice-operated speaker service, scratch cards, software, and loans.
1. Voice-operated speaker
Usually, when you make a payment at a shop through UPI, you hear - "...50 rupees received". According to Mrinal Jhaveri, this is not just a notification but a big way to make money. Many companies like PhonePe, Google Pay, and Paytm have given these voice speakers on rent to shopkeepers, in return for which up to Rs 100 is received every month.
Even though this amount is small, if we look at 100, 200, 1000, or more shops, then this amount reaches millions and crores. Let us tell you that every time the confirmation of payment satisfies both the shopkeeper and the customer. Also, the credibility of the brand increases.
2. Double earnings from scratch cards
Many times, you must have seen that when making a payment, you get scratch cards, which you get in the form of cashback or coupons. According to Mrinal Jhaveri, these cashback coupons are not given to make you happy, but they are a way of branding the brand, i.e., their advertisement. Brands pay for these cards to reach the customers. Due to which these apps get double the benefit.
3. Profit from software and a loan
These companies have turned the power of UPI into a software service (SaaS). Through this, facilities like GST assistance, invoice making, and small loans are being given to small businessmen. The infrastructure of UPI is just an attraction; the real earnings come from software and financial services. The initial cost in this model is zero, which makes it even more effective.
So will UPI always be free?
This is a question that has been in the news a lot in the past few days. On which Reserve Bank of India (RBI) Governor Sanjay Malhotra also reacted on August 6. He said- "I never said that UPI can always be free. It is still not free, someone is paying for it.
Whether collectively or individually, someone has to bear the cost. The government is subsidizing it. But I never said that users will have to pay."
Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
