← WSJ Your Money Briefing
WSJ Your Money Briefing
Google Pay Is the Mobile Payment King in India
00:11:11
Wall Street Journal reporter Newley Purnell explains how Google Pay became the leading mobile payments app in India. Indians have helped the app register more downloads worldwide than PayPal and Venmo in the first half of the year.
Loading summary
Transcript23 lines
- [00:01]
Deel Representative
Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 countries operate like a local everywhere. Visit d e l.com WSJ.
- [00:21]
J.R. Whalen
Here's your Money briefing. I'm J.R. whalen at the Wall Street Journal in New York. PayPal and Venmo are popular apps for mobile payments in the US but in India, hundreds of millions of people use Google Pay. In a moment, we'll check in with our reporter in Delhi who will explain how Google Pay got so popular in India. First, some money and market news you should know the housing market may be on the road to recovery. Sales of existing homes in August rose at their strongest pace since March of last year. August marked the second straight month of growth for existing home sales after 16 straight months of year over year declines. Economists say mortgage rates hovering near 3.5% are helping to entice buyers to re enter the housing market. A lack of confidence in the global economy is one factor driving investors to purchase bonds. As demand rises, prices go up and yields fall. But how low can yields go? A new video from the Wall Street Journal examines how yields have moved into negative territory. Take a listen.
- [01:20]
Wall Street Journal Narrator
Negative rates give investors an incentive to buy bonds rather than park their money at a bank. This drives up demand. These factors have pushed bond prices higher and driven down yields, so much so that they are now in negative territory and in some cases even below the negative rates set by central banks. So why would investors continue to buy bonds with negative yields? Well, if demand continues to rise, buying now means potentially selling bonds later at a higher price.
- [01:49]
J.R. Whalen
See the full video@WSJ.com and the WSJ app and find out why rates in negative territory for longer periods of time can be detrimental to retirees. Just a few years ago, the cost of Internet access made it out of reach for hundreds of millions of India's residents. Well, fast forward to today and more. Indians are online and they're even conducting business online to to the tune of more than $110 billion in digital payments annually. And they're doing it with Google Pay, a two year old app that has, with the help of India, become the most downloaded financial technology app worldwide. Wall Street Journal reporter Nooli Purnell joins us from Delhi to explain how mobile payments have become so popular in India. So newly inexpensive smartphones and data plans have given India's population of 1.3 billion people access to the mobile payment arena. And many of them have bypassed credit card use altogether. And they've gone straight to digital payments.
- [02:54]
Nooli Purnell
That's right. So there's really been a revolution here in India over the last few years. It all started about three years ago when the Indian government, in a bid to crack down on corruption, canceled the highest denomination bills. So suddenly they replaced them with new bills and there was a cash crunch and people had to line up at these long lines for ATMs to get cash. And they started using mobile wallets and started becoming comfortable with that technology. And then Google Pay with its app came along a couple years ago and it's really grown by leaps and bounds. But yeah, it's all built on inexpensive data, which has been another big change here and then falling prices of smartphones. So suddenly smartphones are nearly ubiquitous here and so people are using them now to spend money.
- [03:42]
J.R. Whalen
So was Google Pay the first mobile app to be available in India?
- [03:45]
Nooli Purnell
No, there have been others over the years. In fact, one of the longest running ones is called PayTM, backed by Alibab and Softbank. It's quite popular. They offer a mobile wallet and some other services. But Google Pay is built along with a new wave of some of these other similar apps on a government platform that bureaucrats put together that allows people to connect their bank accounts for free to the platform and transfer them, transfer money either to other bank accounts or to businesses. And it's proved a very popular and easy to use platform. And Google sense that I think that it could be big and so came in quickly a couple years ago and they launched with a big advertising campaign. They give cash back if you use the service and that sort of thing. So it's really taken off.
- [04:33]
J.R. Whalen
Indians use cash still for a lot of things, but millions use Google Pay for a wide range of payments, payments from small to very large.
- [04:43]
Nooli Purnell
Yeah, that's right. One of the interesting things is that you see the Google Pay logo with the familiar multicolored Google G from their logo, you see it all over the place now, along with other ones like paytms and some other players. The way it works is that any mom and pop shop or even a food vendor selling rice and beans or fried bananas or whatever fruit on the side of the street, you'll see they'll have the sign showing that they take Google Pay or other payments along with oftentimes a QR code, which is one of those black and white codes that you could scan with your phone. And when you do that, it connects you to that person and you can transfer the money. So, yeah, they're all over the place. You can use it for paying bills for a lot of People just use it to transfer money to one another. So you want to split a bill or you owe somebody money, you can just simply send it to them through the app.
- [05:35]
J.R. Whalen
Now, Google Pay is available worldwide, but what seems to set it apart in India is the real time payment structure.
- [05:41]
Nooli Purnell
That's right. It's this government structure that the government set up as part of their efforts to kind of spur the digital economy here. And there are many, many dozens of banks on it, many private players. Paytm, which I mentioned, Flipkart, which is owned by Walmart now, which is the Amazon of India, essentially has their own version. And so it's proved to be a really important and easy to use backbone for a lot of these services.
- [06:11]
J.R. Whalen
Where does the overall value of mobile payments in India rank worldwide?
- [06:16]
Nooli Purnell
It's more than the US but far behind China. So China is really the world leader with big tech companies like Alibaba. They have one called Alipay, and then Tencent, another Chinese Internet giant, has one. And those are used in just enormous volumes and in many places, restaurants and shops in big cities, some places don't even take cash. You have to pay using these apps. So India is sort of growing quickly behind China, but ahead of the US where because so many people have plastic, there's not always that huge benefit to using an app. But in places like India, where people have bank accounts, still use a lot of cash, but there are few credit cards or debit cards, if you don't have those, it makes sense to use
- [07:03]
J.R. Whalen
an app, you know. For Google, the success and popularity of Google Pay represents a robust revenue stream that has really sought, as it deals with a lot of regulation around the world.
- [07:13]
Nooli Purnell
A huge proportion, the vast, vast majority of Google's revenue comes from its search advertising. And they've pushed into other areas over the years, whether it's, you know, cloud computing or hardware. And they of course do face the prospect of regulation in the US and other countries. They're very much like other big tech companies from the US in the public eye. And so it seems that this has been a real surprise, a happy surprise for them that the app has taken off so quickly. It's free for now, as many of them are. But some analysts suggest that if they were to introduce advertising or some other ways to get people to pay for, could be worth billions of dollars a year. Now, they caution that they don't have plans at this moment to do that, or at least they're somewhat non committal on the issue. But anytime you have a platform with something like 70 million monthly active users on it, sending these huge volumes of cash. It's important and a valuable source of data and potential advertising. The other big, huge player that is a threat to Google and everyone else is WhatsApp, Facebook's messaging app, which is huge in India and many Asian countries. It has over 400 million users in India alone, making it WhatsApp's biggest market. And they have a trial payment system which works very much like Google Pay, that's been held up in a trial phase for regulatory issues. But some people say when they are finally given the green light to roll that out, that could become the biggest and most dominant platform because they have simply so many users. And you know, virtually everyone who has a smartphone in India has WhatsApp. It's kind of like the default digital town square, if you will. Some people think that once their rolls out, that could be the new, the new titan.
- [09:05]
J.R. Whalen
And even with hundreds of millions of Indian residents using these, these payment apps, there is still quite an untapped market inside India because I think that the usage rate among residents stands around 30%.
- [09:17]
Nooli Purnell
Yeah, right. So that's the amazing thing about the scale of India. You know, you have this huge population of people getting online in the last few years, but still an enormous population of people who, who are just yet offline. They might have a normal old fashioned mobile phone that doesn't have web access. They might not have a mobile phone at all. And so yes, some estimates put the number of people who actually shop online India country of 1.3 billion people. Some people say maybe only 40 or 50 million people actually even shop online. So a much larger percentage, you know, do have smartphones and are using some of these apps. But yeah, enormous, enormous room to grow in India as everyone finally gets connected and starts using many more of these digital services.
- [10:01]
J.R. Whalen
You mentioned that the Indian government is involved along the way here in these mobile payments and there are regulations in place. How has that affected Google pay?
- [10:09]
Nooli Purnell
They rolled out two years ago this month. And a few months after they rolled out, the Reserve bank of India issued some guidelines saying that payment data for some of these apps has to be kept in India. And what happened with WhatsApp's trial pay is that they started to roll it out just before that. And so analysts I talked to the companies don't have much to say on the issue. But the analysts I've talked to speculate that because WhatsApp wasn't fully rolled out by the time these new guidelines came along, that they were sort of held up. It's really actually quite unclear and the government doesn't have much to say about it. But the bigger issue really that we've written about in some of our other stories, India is increasingly, as its digital economy grows, considering ways to rein in some of these big tech companies, whether it's Amazon that's investing $5 billion in India or Facebook, which has huge number of users here. WhatsApp, they're considering ways to try to rein them in a little bit through rules. I don't know that Google Play has gotten caught up in that. But the issue of data localization is an important one that India and some other countries are thinking about.
- [11:16]
J.R. Whalen
All right. That's Wall Street Journal reporter Nooli Purnell joining us from Delhi. Nooli, thanks so much for coming on the show.
- [11:22]
Nooli Purnell
My pleasure. Thanks for having me.
- [11:23]
J.R. Whalen
And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.
- [11:28]
Deel Representative
Still running global payroll like a relay race. Deal replaces fragmented payroll vendors with one global system. No third parties. Hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already use. Workday, SAP, NetSuite operate like a local everywhere. Visit d e e l.com WSJ that's d e e l.com WSJ.