Key Takeaways:
✔ Voice Speakers for Kirana Stores: Rental fees from transaction announcement devices generate ₹360 crore annually.
✔ Scratch Cards as Ads: Brands pay to feature cashback offers, turning rewards into an advertising goldmine.
✔ SaaS & Lending: Financial tools like GST software and microloans create steady revenue streams beyond UPI.
How Google Pay & PhonePe Turned ‘Free’ UPI Into a ₹5,065 Crore Business
Making digital payments via UPI is fast, simple, and completely free for users. Yet, giants like Google Pay and PhonePe managed to rake in a jaw-dropping ₹5,065 crore in revenue last year—without selling a single physical product.
So, how do these platforms make money when UPI transactions cost users nothing? The secret lies in a multi-layered business model built on trust, innovation, and strategic monetization. Let’s break it down.
1. Voice-Enabled Speakers: The Kirana Store Goldmine
As explained by Mrinal Jhaveri, Founding Partner of Ice VC, a significant chunk of revenue comes from small neighborhood shops (kirana stores). Both Google Pay and PhonePe provide voice-enabled speakers that announce transactions with messages like “₹100 received via PhonePe.”
These devices are rented to shop owners for ₹100 per month. With over 3 million stores using them, the platforms earn roughly ₹30 crore monthly—adding up to ₹360 crore annually. Beyond profits, this builds trust among customers and helps merchants track payments seamlessly.
2. Scratch Cards: A Win-Win for Brands & Users
Ever won a ₹10 cashback or discount coupon on Google Pay? Those scratch cards aren’t just rewards—they’re ads in disguise.
Brands pay hefty sums to feature their promotions on these cards, gaining visibility among millions of users. For Google Pay and PhonePe, this creates a high-engagement ad platform that drives revenue while keeping users hooked.
3. SaaS & Lending: The Real Money Maker
UPI was just the entry point—the real profits come from value-added financial services. Both platforms now offer:
- GST and invoicing tools for small businesses
- Microloans and credit services
- Subscription-based software solutions
Since UPI already brings in millions of users, these services operate with near-zero customer acquisition cost (CAC), making them highly profitable.
The Bigger Picture
What started as a free payments system has evolved into a financial ecosystem—where convenience for users means big money for platforms. With India’s UPI transactions crossing 10 billion monthly, Google Pay and PhonePe have cracked the code: free for users, lucrative for them.
Stay tuned to AlwaysFirst for more deep dives into the business strategies behind India’s biggest digital disruptors!
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