Daybreak - Could a cashback convince you to change your go-to UPI app?

Episode Date: March 23, 2025

Remember that time in 2022 when India’s top digital payments companies Phonepe, Paytm*, and Bharatpe were in a no-holds-barred turf war? Looking back, it seemed like there was news almost every other day about some tiff between the three market leaders. In fact, former managing director of Bharatpe, Ashneer Grover, has spoken on record about “street fights” between companies’ employees over QR codes. A little more than two years later, there’s only calm. QR code scuffles are over. No one is beating each other up. Both the peer-to-merchant and peer-to-peer payments space have settled down into a tripartite peace. Phonepe, Google Pay, and Paytm—in order of market share—are the clear leaders. This raises some interesting questions: How many UPI apps do you have on your phone? And do you have a favourite one? We may have multiple, but only one of them is ever really used. No amount of cashbacks or fancy user experiences make people want to switch to something else. Is it brand loyalty that is preventing users from churning out of old platforms and into new ones? A former Paytm executive told The Ken, “There is zero brand loyalty for UPI payments apps…” Well then, what is happening?*Paytm founder Vijay Shekhar Sharma is an investor in The Ken*This episode was first published on December 30, 2024Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcast, you've probably heard me. My interruptions, my analogies and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first studio. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Hi there. So today I'm going to be reading out the edition of the Ken's FinTech newsletter Kaching by our writer Ronak Kumar Gunjan. Ronuk has written some of our best reports. And if you're a regular listener of Daybreak, you may have heard.

him on our Friday special episode where he told us about digital fraud and how it's evolving. Now, last week, he wrote a fascinating edition about UPI apps. So without further ado, here goes. Remember that time in 2022 when India's top digital payment companies, PhonePay, Ptm and Bharat Pay were in a no-holds-baud turf war. Looking back, it seemed like there was news almost every other day about some tiff between the three market leaders. In fact, former managing director of Bharat Payashneed Grover has spoken on record about street fights between companies, employees over QR codes. A little more than two

years later, there is only come. QR code scuffles are over. Nobody is beating each other up. Both the peer-to-merchant and peer-to-peer payment space have settled down into a tripartite piece. Phone pay, Google Pay and Pay-TM in order of market share, are the clear leaders. Despite the recent regulatory troubles, Ptm's volume of UPI transactions in November 2024 was more than seven times that of Navi, the company, fourth in line in terms of market share. And Ptm is not even close to the top two, phone pay and Google pay, which, to me, raise some interesting questions. And now I'm going to ask them to you. How many UPI apps do you have on your phone. And do you have a favorite one? Me, I just have two UPI apps, but only one of

them is ever really used. No amount of cashbacks or fancy user experiences have made me want to switch to something else. And I'm not the only one behaving like this. Last week, non-bank Bajajaj finance said that it was tempering its ambitions in the payment space after having invested over three years of effort and more than $100 million in its payment app, Bajaj Pay. An app that is to quote Bajajan's managing director Rajiv Jain virtually similar to Google Pay and phone pay. So is it brand loyalty that is preventing users from churning out of old platforms into new ones?

A former PTAM executive told me recently and I'm quoting, there is zero brand loyalty for UPI payment apps, end quote. Well, then, what is happening? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Das Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague, Rahil Filippos and I will come to you with one business story that is worth understanding and worth your time. From what I've gathered during my conversations with executives in the sector, it is more about what isn't happening. Picture this.

It is the pre-internet banking era. You're experiencing in real time all the cliches about bank branches being boring, slow and inefficient. And a not insignificant amount of your time is spent standing in cues fantasizing about changing banks. But you very rarely do. Why? Because your bank is simply good enough, even after accounting for all its faults. and none of its competitors are so much better that shifting to them is a no-brainer. So you swallow the temporary frustrations and carry on.

This is what brand marketers called brand inertia. And it is why people are not switching between UPI apps. In fact, inertia, not just among customers, but the larger UPI space, also showed up in Jens' explanation of why Bajajaj finance was pulling back on payments ambitions. Here is what he said and I'm quoting him. After three years of work and if you use Bajarge pay, you would find that the functionalities are virtually similar to a Google Pay and phone pay. It is a product of huge inertia and we are a public company. We have to publish results every quarter. We have invested virtually $100 million in building on Bajarge pay over the last

three years. It made sense that clearly we focus on viability of the payments business. End quote. Just to be clear, brand inertia is very different from brand loyalty. Say you're at a restaurant. You ask for Fanta, an orange-flavored fizzy drink. The waiter says they only serve Mirinda, another orange-flavored soda. At this point, you leave the restaurant in search of a place that serves Fanta. Then that would be brand loyalty. But how many of us would do that? Brand inertia on the other hand develops because there is no obviously better alternative. We already make innumerable choices every day.

And the last thing we want to do is spend more energy evaluating options for very little gain. And thus, the current holding pattern in UPI market share. Stay tuned for more. Perhaps companies and platforms wanting to shake up the UPI space could take a cue from what is happening right under their noses with caller IDs. True caller is by far the most used caller ID app in India. But I recently came across an ex or Twitter thread and had a conversation with an acquaintance that made me aware of a recent trend.

Apparently, some people are now deleting True caller from their phones because of privacy concerns and instead using their payment apps to check for information on unknown numbers. Yes, you heard that right. One of the ex-users that I spoke with said, and I'm quoting them, Payments apps have several advantages. One, they already have a critical user data and are trusted with it. Second, the names that come as a search result are the ones that are there on the user's adhar card.

So there is no fraud or duplication happening. End quote. Of course, payments apps cannot match true callers, repository or phone numbers, especially its ability to flag spam and scam calls. But what they do offer seems to be good enough for users concerned about true caller. So why doesn't brand inertia come into play here? Because unlike with UPI payments, people switching over from true caller have been given a strong enough push. Privacy concerns to these users are a good enough reason to change habits,

which is the lesson payment apps looking to rattle the cage should take away. There are two potential UPI challengers who are beginning to show some promise. First, there is Sachin Bansel's Navi, which has moved swiftly up the ranks and is presently the fourth largest UPI player in terms of volume of transactions. Second, there is Flipkart-backed super money, which has made significant progress in just six months after its launch and already occupies the seventh spot. Navi's rise is thanks to aggressive promotional offers such as cashbacks that sometimes go as high as 10 rupees per transaction.

Of course, how sustainable such tactics are is open to question. Super Money, on the other hand, is banking on facilitating credit products on UPI and attracting a younger audience. The value attached to a mature brand like Flipcott also, does not hurt its prospects. Both are still miles away from seriously challenging the top three. But at least they are trying to give users some reasons to switch. Daybreak is produced from the newsroom of the Ken,

India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snigda Sharma and edited by Rajiv Siyadh.