UPI Business Model: How Do Google Pay and PhonePe Earn Crores Even Though UPI is Free?

UPI Business Model: In today’s digital age, we all depend on Unified Payments Interface (UPI) apps like Google Pay and PhonePe. These apps have made our lives much easier, allowing us to transact money quickly and for free. But have you ever wondered how these companies earn thousands of crores of rupees despite these services being free? In today’s post, we will discuss in detail the various sources of income and the business models of these apps.

Main Sources of Income

Although companies like Google Pay and PhonePe do not charge money directly from customers, they have various ways of earning. These methods are discussed below:

• Recharge and Bill Payments: When we use these apps to recharge our mobiles or pay bills for electricity, water, gas, etc., these companies receive a certain amount of commission from the respective service provider companies. This commission is a major source of their income.
• Switch Platform: Apps like PhonePe have a ‘Switch’ section where services from various brands (like Myntra, Domino’s, Ola) can be used directly from within the app. When a customer avails any service through this platform, PhonePe receives a commission or an advertising fee from that brand.
• Digital Gold: Many UPI apps offer the facility to buy and sell digital gold on their platform. When customers buy or sell digital gold, these companies earn a small commission.
• Financial Services: These apps offer various financial services on their platform, such as mutual funds, insurance, and loans. When a customer avails these services, the company receives a commission from the respective financial institution. This is a growing and important source of their income.
• Data Monetization: These apps analyze customer transaction data to make various business decisions and improve their services. Although they do not sell customer data directly, this data helps them to establish business relationships with various partners and launch new services.

Future Plans

UPI apps are constantly expanding their range of services. They are planning to add more new services to their platform, which will further diversify their sources of income. For example, they are trying to integrate e-commerce, ticket booking, and many other services into their app.

Hopefully, this post has given you a clear idea about the business model of UPI apps and their sources of income. Although we use these services for free, there is a strong and profitable business model behind them.