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Mumbai/ Bengaluru: Google Pay has been ramping up its India presence with the launch of new services to take on peers PhonePe and Paytm in the fast-growing digital payments market. Unified Payments Interface (UPI) transactions on Google Pay have grown by almost 22% in the past three months to gain nearly 34% of the market share, second only to arch rival PhonePe.

In an interaction with Mint, Ambarish Kenghe, vice-president, product management, Google Pay, shares his views on the National Payments Corporation of India’s move to cap the market share of UPI apps to 30%, investments in payment infrastructure and new areas of growth. Edited excerpts:

Google Pay has voiced its concerns over UPI market cap. What have you been relaying to NPCI? Also, what is your take on zero merchant discount rates (MDR)?

On market cap, we have always stood for competition. And, it’s very early, so we want to make sure there is enough competition and that’s a good thing.

On the question of sustainability, I definitely think that we need to make the (UPI) ecosystem sustainable. There are various ways, and I think it’s hard to say whether MDR is the right way of doing it or if there are other means.

India has always innovated and leapfrogged. So, I do not know whether we will evolve with MDR, or in any other way. But we need to make it (UPI) more sustainable and find ways as we want to figure this out. (MDR is the percentage charged to merchants by payments firms for processing digital payments).

Will you be bringing down your market share to meet NPCI norms?

The way it (market cap) is designed, there is time before it applies. It is the Indian rules we play by. So, right now there is a plan being put in place, where we work with NCPI and others once the market cap kicks in. The piece we are concerned about is that once it (market cap) gets applied, users should not be impacted. That is Google Pay’s biggest concern. So, we are working with the ecosystem. (Last November, NPCI, which operates UPI, decided to impose a market cap, where payments firms can process a maximum of 30% of UPI transaction volumes in the preceding three months.)

You spoke about sustainability of the UPI ecosystem. How does Google Pay plan to introduce monetization on its platform? Is lending an opportunity for Google?

Credit is superly under-penetrated. We don’t do any credit directly, in spite of playing in the same ecosystem—similar to the role we play in UPI, where we are transferring money but the money goes to the banks. In the same way, we are playing a bit of a role with credit through access and instant loans. This is a story that we will see over the next five years.

Payment players have suffered in the past due to outages by banking partners. How is Google Pay investing in infrastructure to mitigate failure rates and downtime?

I feel whether it is public or digital infrastructure, you have to build for the future. If you build for today’s demand, it runs out by the time you build it.

Internally, we monitor the health of various parts of the transaction, and we try to predict the challenges of a certain transaction.

We are also enabling multiple virtual payment addresses for consumers, and do it thoughtfully, ensuring that banking partners can take the load; so that if a certain (banking) network is choked, we can route the transaction through a different bank.

With the launch of MyShop, how are you looking at the kirana-tech piece and enabling commerce on Google Pay?

Today, more than 10 million merchants are accepting Google Pay payments. Merchants have been strongly impacted (by the pandemic). Even after opening, the same traffic isn’t coming to the shop.

So, we said why can’t they have an online presence directly and that is what MyShop as a platform does.

Earlier, we had done a pilot on credit and supplies to business where they (the merchants) could order supplies, because fast-moving consumer goods companies may not be visiting tier-2 and tier-3 cities. And these are scaling.

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