India Payment And Commerce Competition Heats Up

Payments and commerce competition in India is quickly heating up in 2018, with Google the latest company to make a major play there as it eyes further expansion in Asia.

Google said that Tez, its digital payment app designed for the Indian market, will be rebranded as Google Pay, which already operates in 20 countries. Google also said it was working with India-based financial institutions Federal Bank, HDFC Bank, ICICI Bank and Kotak Mahindra Bank for an “instant loan” offering via the digital payment app.

Tez — or Google Pay in India — also will reportedly gain capabilities for online and offline retail after already being able to handle bank-based, bill and utility payments.

Google Expansion

In fact, the Google digital payment offering in India supports transactions for approximately 20,000 apps and websites, and soon will integrate with Uber, BookMyShow and other services. Consumers in India have downloaded Tez 55 million times and used it for 750 million transactions. That is giving Google reason to plan the payment tool’s international expansion.

Tez, which means "fast" in Hindi, has already integrated with the country’s unified payments interface, which debuted in 2016 and is designed to promote digital payments and financial inclusion. India is expected to have a digital payments market worth $1 trillion by 2023, a figure that represents “five-fold” growth from now, according to an estimate.

Google’s moves in India could pose a threat to India-based Paytm, the country’s largest digital payments provider — and reportedly, a possible investment target for Berkshire Hathaway, which is considering putting between 20 billion and 25 billion rupees ($286 million to $357 million) into One97 Communications, Paytm’s parent firm.

Not to be left behind, Facebook-owned WhatsApp wants approval from the Indian government to officially launch its digital payment service all across the country. In February, WhatsApp launched a payments feature in India that now has around one million users. The app is in the process of fixing any issues with the payment feature and adding more functionality during beta testing of the service, which is based on the Unified Payments Interface.

eCommerce Growth

Online retail, meanwhile, continues to grow in India, and that market could hit $200 billion by 2026 if one goes by a Morgan Stanley estimate. That market will grow at a 30 percent compound annual growth rate until then. “An increasing number of internet users, all new to eCommerce, will help lead this growth,” the report said.

Euromonitor has said that online sales in India are currently growing about 35 percent a year, fueled by a rising middle class, demonetization and an increasing push toward urbanization.

And that growth is driving other competition in the world’s second most populous country. China-based Alibaba, for instance, reportedly wants to build a “a mega Indian retail joint venture” with an investment of “at least $5 billion” with billionaire Mukesh Ambani’s Reliance Retail. Among the goals? Take on Amazon and Walmart-owned Flipkart in winning digital business from India’s increasing connected consumers.

Amazon is looking to up its investment in the country, committing another $2 billion on top of $5 billion of previous investment. In terms of investment, India represents Amazon’s largest market besides the United States, with those expenditures paying off in terms of increased traffic and market share for the eCommerce operator.

Alibaba and Amazon are also trying to fend off Walmart’s Flipkart, target of a $16 billion deal with the U.S.-based retail chain. “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading the transformation of eCommerce in the market,” Walmart CEO Doug McMillon said at the time.

Recently, Flipkart announced an eCommerce play that involves refurbished product sales. The company recently launched an eCommerce platform called 2GUD that focuses on the sale of refurbished electronics. The site is the latest entry in what some people call “recommerce,” an area of online retail that is showing signs of gaining fresh steam.

In India, the refurbished product market size stands at an estimated $4 billion. “The feeling of status elevation by using a better-quality brand or product at a reasonable price point is helping this segment grow,” read a report on the global refurbished market. “Even more so, the large number of first-time buyers, students and technophiles who want to upgrade their gadgets find great value in refurbished smartphones.”

The race to acquire customers and win their loyalty promises even more attention and investment as the average consumer in India further embraces the digital lifestyle and wields more consumer spending power.



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