PhonePe, the digital payments arm of the Walmart group, has begun imposing processing costs of between 1 and 2 rupees per transaction for cellphone recharges of more than 50 rupees, even if done through the Unified Payments Interface (UPI), according to news agency PTI. PhonePe is the first digital payment software to charge customers for UPI-based transactions, which are currently available for free from competitors such as GooglePay and PayTM.
In terms of recharges, we’re conducting a small-scale trial in which a few consumers pay for cellphone recharges. Recharges of less than ₹50 are not charged, recharges of ₹50 to ₹100 are charged Re 1, and recharges of more than ₹100 are charged Re 2. ‘Essentially, a majority of consumers are either not paying anything or paying Re 1 as part of the experiment,’ a PhonePe spokeswoman was reported as saying by news agency PTI.
According to a report by news agency PTI, digital payment has the greatest percentage of UPI transactions among third-party apps. In September, PhonePe reported more than 165 crore UPI transactions on its platform, accounting for 40% of the app market.
We aren’t the only one who charges a fee or uses a third-party payment platform. Charging a small fee for bill payments has become industry standard, and other biller websites and payment systems follow suit. Only credit card payments are subject to a processing fee (sometimes known as a convenience fee on other platforms),’ the spokeswoman added.
In a survey released in July, investment research firm Bernstein found that PhonePe and Google Pay were among the companies that continued to invest in delivering user incentives and marketing spending at 2.5-3.0 times. PayTM, another digital payment company, reduced marketing spend from 1.2 times revenue in FY17 to 0.4 times revenue in FY20 and is now at 0.4 times revenue.
PayTM, another digital payment provider, reduced its marketing spend from 1.2 times revenue in FY17 to 0.4 times revenue in FY20 and is now at 0.2 times revenue in FY21, all while increasing merchant payments shares across wallets, UPI, PoS, and online payments.
The National Payments Corporation of India (NPCI) has also set a market share cap for UPI, preventing any participant from having more than 30% of the market.
According to the Bernstein study, the NPCI market share caps will force PhonePe and Google Pay to reduce customer incentives in order to reach the 30% cap.
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