Why is Google's support for UPI like system in US so interesting?
1. Politics: GPay is a among the top 2 UPI providers in India (often 1st), and there have been concerns among so-called-domestic companies about its dominance. This is v. useful ego massage of Indian govt egos.
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1. Politics: GPay is a among the top 2 UPI providers in India (often 1st), and there have been concerns among so-called-domestic companies about its dominance. This is v. useful ego massage of Indian govt egos.
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2. Markets: Google is actually operating in a highly regulated environment here. Almost a quasi license. For a silicon valley company to support such a tight regulatory environment is huge. But, regulated environments = lower competition. Google can dominate those more easily.
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Imagine that regulated environment spreading across the world, where Google can have a play. More direct access to payments systems, competition for and lower dependence on PayPal. More visibility on payments.
And then there's...
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And then there's...
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3. Leverage: the combination of advertising and payments brings greater leverage for a company. It gives it end to end visibility on txns and allows Google to demonstrate to brands that advertising is actively leading to a txn. Google has more to benefit from controlling the 👇
expanse of the value chain than any other company. & It gets to know more about users and behavior based on spending patterns.
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Payments has always been regulated so platforms have historically been aggregators. Now they're looking to be participants in a regulated environ👇
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Payments has always been regulated so platforms have historically been aggregators. Now they're looking to be participants in a regulated environ👇
Others will move into this. Facebook, via WhatsApp already is trying to, but there's a regulatory block in India because of local politics (Paytm). Google got away by launching early (¬ in beta). It has done really well.
Props to @caesars for his vision and aggression.
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Props to @caesars for his vision and aggression.
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The challenges here will be in three key things:
1. Business model: the UPI like model is disruptive and largely value destructive for the payments industry and banks because there's no incentive (yet) apart from data gathering.
1. Business model: the UPI like model is disruptive and largely value destructive for the payments industry and banks because there's no incentive (yet) apart from data gathering.
2. Regulatory complexity: if diff countries adopt diff approaches to UPI, owing to local complexities, global UPI businesses will opt out of low user base/low value markets. Most payments systems (MasterCard, VISA) work globally. Managing regulatory complexity will be a pain.👇
3. Consumer trust: most important. UPI, by design, is a debit system linked to a bank account. Surface area of risk is too high for customers, and phishing and social engineering are rife in India. Fraud prevention isn't working too well for UPI. This needs massive work.
