Google and Walmart’s PhonePe establish dominance in India’s mobile payments market as WhatsApp Pay struggles to launch

In India, it’s Google and Walmart-owned PhonePe that are racing neck-and-neck to be the top player in the mobile payments market, while Facebook remains mired in a regulatory maze for WhatsApp Pay’s rollout.

In May, more than 75 million users transacted on Google Pay app, ahead of Walmart -owned PhonePe’s 60 million users, and SoftBank -backed Paytm’s 30 million users, people familiar with the companies’ figures told TechCrunch.

Google still lags Paytm’s reach with merchants, but the Android -maker has maintained its overall lead in recent months despite every player losing momentum due to one of the most stringent lockdowns globally in place in India. Google declined to comment.

Paytm, once the dominant player in India, has been struggling to sustain its user base for nearly two years. The company had about 60 million transacting users in January last year, said people familiar with the matter.

Data sets consider transacting users to be those who have made at least one payment through the app in a month. It’s a coveted metric and is different from the much more popular monthly active users, or MAU, that various firms use to share their performance. A portion of those labeled as monthly active users do not make any transaction on the app.

India’s homegrown payment firm, Paytm, has struggled to grow in recent years in part because of a mandate by India’s central bank to mobile wallet firms — the middlemen between users and banks — to perform know-your-client (KYC) verification of users, which created confusion among many, some of the people said. These woes come despite the firm’s fundraising success, which amounts to more than $3 billion.

In a statement, a Paytm spokesperson said, “When it comes to mobile wallets one has to remember the fact that Paytm was the company that set up the infrastructure to do KYC and has been able to complete over 100 million KYCs by physically meeting customers.”

Paytm has long benefited from integration with popular services such as Uber, and food delivery startups Swiggy and Zomato, but fewer than 10 million of Paytm’s monthly transacting users have relied on this feature in recent months.

Two executives, who like everyone else spoke on the condition of anonymity because of fear of retribution, also said that Paytm resisted the idea of adopting Unified Payments Interface. That’s the nearly two-year-old payments infrastructure built and backed by a collation of banks in India that enables money to be sent directly between accounts at different banks and eliminates the need for a separate mobile wallet.

Paytm’s delays in adopting the standard left room for Google and PhonePe, another early adopter of UPI, to seize the opportunity.

Paytm, which adopted UPI a year after Google and PhonePe, refuted the characterization that it resisted joining UPI ecosystem.

“We are the company that cherishes innovation and technology that can transform the lives of millions. We understand the importance of financial technology and for this very reason, we have always been the champion and supporter of UPI. We, however, launched it on Paytm later than our peers because it took a little longer for us to get the approval to start UPI based services,“ a spokesperson said.

A sign for Paytm online payment method, operated by One97 Communications Ltd., is displayed at a street stall selling accessories in Bengaluru, India, on Saturday, Feb. 4, 2017. Photographer: Dhiraj Singh/Bloomberg via Getty Images

Missing from the fray is Facebook, which counts India as its biggest market by user count. The company began talks with banks to enter India’s mobile payments market, estimated to reach $1 trillion by 2023 (according to Credit Suisse), through WhatsApp as early as 2017. WhatsApp is the most popular smartphone app in India with over 400 million users in the country.

Facebook launched WhatsApp Pay to a million users in the following year, but has been locked in a regulatory battle since to expand the payments service to the rest of its users. Facebook chief executive Mark Zuckerberg said WhatsApp Pay would roll out nationwide by end of last year, but the firm is yet to secure all approvals — and new challenges keep cropping up. WhatsApp declined to comment.

PhonePe, which was conceived only a year before WhatsApp set eyes to India’s mobile payments, has consistently grown as it added several third-party services. These include leading food and grocery delivery services Swiggy and Grofers, ride-hailing giant Ola, ticketing and staying players Ixigo and Oyo Hotels, in a so-called super app strategy. In November, about 63 million users were active on PhonePe, 45 million of whom transacted through the app.

Karthik Raghupathy, the head of business at PhonePe, confirmed the company’s transacting users to TechCrunch.

Three factors contributed to the growth of PhonePe, he said in an interview. “The rise of smartphones and mobile data adoption in recent years; early adoption to UPI at a time when most mobile payments firms in India were betting on virtual mobile-wallet model; and taking an open-ecosystem approach,” he said.

“We opened our consumer base to all our merchant partners very early on. Our philosophy was that we would not enter categories such as online ticketing for movies and travel, and instead work with market leaders on those fronts,” he explained.

“We also went to the market with a completely open, interoperable QR code that enabled merchants and businesses to use just one QR code to accept payments from any app — not just ours. Prior to this, you would see a neighborhood store maintain several QR codes to support a number of payment apps. Over the years, our approach has become the industry norm,” he said, adding that PhonePe has been similarly open to other wallets and payments options as well.

But despite the growth and its open approach, PhonePe has still struggled to win the confidence of investors in recent quarters. Stoking investors’ fears is the lack of a clear business model for mobile payments firms in India.

PhonePe executives held talks to raise capital last year that would have valued it at $8 billion, but the negotiations fell apart. Similar talks early this year, which would have valued PhonePe at $3 billion, which hasn’t been previously reported, also fell apart, three people familiar with the matter said. Raghupathy and a PhonePe spokesperson declined to comment on the company’s fundraising plans.

For now, Walmart has agreed to continue to bankroll the payments app, which became part of the retail group with Flipkart acquisition in 2018.

As UPI gained inroads in the market, banks have done away with any promotional incentives to mobile payments players, one of their only revenue sources.

At an event in Bangalore late last year, Sajith Sivanandan, managing director and business head of Google Pay and Next Billion User Initiatives, said current local rules have forced Google Pay to operate without a clear business model in India.

Coronavirus takes its toll on payments companies

The coronavirus pandemic that prompted New Delhi to order a nationwide lockdown in late March preceded a significant, but predictable, drop in mobile payments usage in the following weeks. But while Paytm continues to struggle in bouncing back, PhonePe and Google Pay have fully recovered as India eased some restrictions.

About 120 million UPI transactions occurred on Paytm in the month of May, down from 127 million in April and 186 million in March, according to data compiled by NPCI, the body that oversees UPI, and obtained by TechCrunch. (Paytm maintains a mobile wallet business, which contributes to its overall transacting users.)

Google Pay, which only supports UPI payments, facilitated 540 million transactions in May, up from 434 million in April and 515 million in March. PhonePe’s 454 million March figure slid to 368 million in April, but it turned the corner, with 460 million transactions last month. An NPCI spokesperson did not respond to a request for comment.

PhonePe and Google Pay together accounted for about 83% of all UPI transactions in India last month.

Industry executives working at rival firms said it would be a mistake to dismiss Paytm, the one-time leader of the mobile payments market in India.

Paytm has cut its marketing expenses and aggressively chased merchants in recent quarters. Earlier this year, it unveiled a range of gadgets, including a device that displays QR check-out codes that comes with a calculator and USB charger, a jukebox that provides voice confirmations of transactions and services to streamline inventory management for merchants.

Merchants who use these devices pay a recurring fee to Paytm, Vijay Shekhar Sharma, co-founder and chief executive of the firm told TechCrunch in an interview earlier this year. Paytm has also entered several businesses, such as movie and travel ticketing, lending, games and e-commerce, and set up a digital payments bank over the years.

“Everyone knows Paytm. Paytm is synonymous with digital payments in India. And outside, there’s a perceived notion that it’s truly the Alipay of India,” an executive at a rival firm said.

Facebook strikes global licensing deal with Indian music label Saregama

Facebook said on Wednesday it has entered into a global deal with Saregama, one of India’s oldest music labels, to license its music for video and other social experiences across its eponymous service and Instagram.

This partnership, which comes weeks after Swedish music giant Spotify also signed a deal with Saregama, will allow users to choose from a wide variety of music to add to their social experiences such as videos, stories via music stickers and other creative content, Facebook said. Users will also be able to add songs to their Facebook profile.

Saregama, one of the oldest music labels in the world, is the best place to find tracks from several India music legends including Lata Mangeshkar, R.D. Burman, Mohammed Rafi, Talat Mahmood, Manna Dey, Kalyanji-Anandji, and Hemant Kumar. The giant says its library contains over 100,000 songs, ghazals, and more in over 25 languages.

Facebook maintains similar deals with other music labels in India, its biggest market by users count, including Yash Raj Films, Zee Music Company, and T-Series, one of the top YouTube channels worldwide. Bloomberg reported last year that Facebook was also in talks with international music labels.

“At Facebook, we believe music is an integral part of self-expression and bringing people closer together and creating memories that last. We are very proud to partner with Saregama that will allow people on our platforms, globally, to use their favourite retro Indian music to further enrich their content on our platforms,” said Manish Chopra, Director and Head of Partnerships at Facebook India, in a statement.

Facebook has also signed deals with music labels such as Universal Music Group in the past to license its recorded music and publishing catalogs for video and other content across its services including Oculus. In 2018, Facebook also signed a deal with Spotify to allow users to share Spotify albums, tracks to Instagram Stories — a feature it added to Facebook Stories last year.

Facebook and PayPal invest in Southeast Asian ride-hailing giant GoJek

Facebook and PayPal have made investments in GoJek, joining Google and Tencent among other high-profile technology companies that have backed the Southeast Asian ride-hailing firm.

Facebook, for which it is the first investment in an Indonesia-based firm, and PayPal did not disclose the size of their checks. Five-year-old GoJek said the companies were participating in its ongoing financing round.

Gojek, WhatsApp and Facebook are indispensable services in Indonesia. Working together we can help bring millions of small businesses and the customers they serve into the largest digital economy in Southeast Asia,” said Matt Idema, Chief Operating Officer at WhatsApp, in a statement.

More to follow…

Google pulls ‘Remove China Apps’ from Play Store

Remove China Apps, an app that gained popularity in India in recent weeks and did exactly what its name suggests, has been pulled from the Play Store.

The top trending app in India, which was downloaded more than 5 million times since late May and enabled users to detect and easily delete apps developed by Chinese firms, was pulled from Android’s marquee app store for violating Google Play Store’s Deceptive Behaviour Policy, TechCrunch has learned.

Under this policy an app on Google Play Store cannot make changes to a user’s device settings, or features outside of the app without the user’s knowledge and consent, and not it can encourage or incentivize users into removing or disabling third-party apps.

The app, developed by Indian firm OneTouch AppLabs, gained popularity in India in part because of a growing anti-China sentiment among many citizens as tension between the world’s two most populous nations has escalated in recent days over a Himalayan border dispute.

Several Indian celebrities in recent days have backed the idea of deleting Chinese apps. Yoga guru Baba Ramdev tweeted a video over the weekend that showed him deleting several apps that had affiliation with China.

Responding to a tweet from an Indian actor deleting TikTok from his phone, Nupur Sharma, a spokeswoman for India’s ruling party BJP, said it was “great to see concerned citizens setting an example” and “we ought to hit them where it hurts most.”

Citing an industry source, Chinese state-run Global Times news outlet reported on Tuesday that if the Indian government allows the “irrational anti-China sentiment” to continue it risks ruining bilateral relations that is “likely to draw tit-for-tat punishment from Beijing.”

The report added that some users in China ridiculed Remove China Apps and urged Indians to “throw away” their smartphones, referring to Chinese smartphone makers’ dominance in India’s smartphone market.

If the sentiment from India persists, it could mean bad news for several Chinese firms such as ByteDance and UC Browser that count India as their biggest overseas market. TikTok, which weeks ago was grappling with content moderation efforts in India, sparked a new debate over the weekend after a popular creator claimed that a video she posted on TikTok was pulled by the Chinese firm.

The video was critical of the Chinese government, she said. In a statement to TechCrunch, a TikTok spokesperson said the platform welcomes diversity of users and viewpoints and said it had implemented a more rigorous review process and reinstated the video.

In April, India amended its foreign direct investment policy to enforce tougher scrutiny on Chinese investors looking to cut checks to firms in the world’s second largest internet market. New Delhi, which maintains a similar stand for investors from several other neighboring nations, said the measure was introduced to “curb the opportunistic takeover” of Indian firms going through distress because of the global pandemic.

India’s Prime Minister Modi has also aggressively promoted the idea of boycotting goods made by foreign firms and advised the nation’s 1.3 billion citizens to look for local alternatives as part of his push to make India “self-reliant” and revive the slowing economy.

India’s richest man built a telecom operator everyone wants a piece of

As investors’ appetites sour in the midst of a pandemic, a three-and-a-half-year-old Indian firm has secured $10.3 billion in a month from Facebook and four U.S.-headquartered private equity firms.

The major deals for Reliance Jo Platforms have sparked a sudden interest among analysts, executives and readers at a time when many are skeptical of similar big check sizes that some investors wrote to several young startups, many of which are today struggling to make sense of their finances.

Prominent investors across the globe, including in India, have in recent weeks cautioned startups that they should be prepared for the “worst time” as new checks become elusive.

Elsewhere in India, the world’s second-largest internet market and where all startups together raised a record $14.5 billion last year, firms are witnessing down rounds (where their valuations are slashed). Miten Sampat, an angel investor, said this week that startups should expect a 40%-50% haircut in their valuations if they do get an investment offer.

Facebook’s $5.7 billion investment valued the company at $57 billion. But U.S. private equity firms Silver Lake, Vista, General Atlantic, and KKR — all the other deals announced in the past five weeks — are paying a 12.5% premium for their stake in Jio Platforms, valuing it at $65 billion.

How did an Indian firm become so valuable? What exactly does it do? Is it just as unprofitable as Uber? What does its future look like? Why is it raising so much money? And why is it making so many announcements instead of one.

It’s a long story.

Run up to the launch of Jio

Billionaire Mukesh Ambani gave a rundown of his gigantic Indian empire at a gathering in December 2015 packed with 35,000 people including hundreds of Bollywood celebrities and industry titans.

“Reliance Industries has the second-largest polyester business in the world. We produce one and a half million tons of polyester for fabrics a year, which is enough to give every Indian 5 meters of fabric every year, year-on-year,” said Ambani, who is Asia’s richest man.

India rejects Walmart-owned Flipkart’s proposed foray into food retail business

The Indian government has rejected Flipkart’s proposal to enter the food retail business in a setback for Walmart, which owns majority of the Indian e-commerce firm and which recently counted its business in Asia’s third-largest economy as one of the worst impacted by the global coronavirus pandemic.

The Department for Promotion of Industry and Internal Trade (DPIIT), a wing of the nation’s Ministry of Commerce and Industry, told Flipkart, which competes with Amazon India, that its proposed plan to enter the food retail business violates regulatory guidelines.

Flipkart’s proposed food retail business, called Flipkart FarmerMart, cannot be structured on a 100% foreign direct investment, the Indian agency said. Rajneesh Kumar, chief corporate affairs officer at Flipkart, told TechCrunch that the company was evaluating the agency’s response and intended to re-apply.

“At Flipkart, we believe that technology and innovation driven marketplace can add significant value to our country’s farmers and food processing sector by bringing value chain efficiency and transparency. This will further aid boosting farmers’ income & transform Indian agriculture,” he added.

While announcing the plan to enter the nation’s growing food retail market, Kalyan Krishnamurthy, Flipkart Group CEO, said in October last year that the company planned to invest $258 million in the new venture.

Flipkart planned to invest deeply in the local agriculture-ecosystem, supply chain, and work with tens of thousands of small farmers, their associations, and the nation’s food processing industry, Krishnamurthy said. The food retail unit would help “multiply farmers’ income and bring affordable, quality food for millions of customers across the country.”

Several e-commerce and grocery firms in India, including Amazon, Zomato, and Grofers, have previously secured approval from New Delhi, which earlier permitted 100% foreign direct investment in food and a handful of other sectors, for entering the food retail business.

The Indian government has since revisited the guidelines to clarify that food retail, like any other e-commerce sector, can only operate as a marketplace that allows third-party sellers to engage with buyers — and not offer their own inventories, nor have equity in any of the players who sell on the platform.

Food and grocery are compelling categories for e-commerce businesses in India as it enables them to engage with their customers more frequently. According to research firm Forrester, India’s online food and grocery market remain significantly tiny, accounting for just 1% of the overall sales.

In the most recent quarterly earnings call, Walmart said limited operations at Flipkart had negatively affected the group’s overall growth. New Delhi announced one of the world’s stringent lockdowns across the nation in late March that restricted Amazon and Flipkart from delivering in many states and only sell “essential items” such as grocery and hygienic products.

India maintains the stay-at-home orders for its 1.3 billion citizens, though it has eased some restrictions in recent weeks to resuscitate the economy.

Singapore’s micromobility startup Beam raises $26 million

Beam, a Singapore-headquartered micromobility firm that offers shared e-scooters, has raised $26 million in a new financing round as it looks to expand its footprint in Korea, Australia, Malaysia, New Zealand, and Taiwan.

Sequoia India and Hana Ventures led the two-and-a-half-year-old startup’s Series A financing round, while several more investors from Asia Pacific region including RTP Global, AppWorks, Right Click, Cherubic and RedBadge Pacific participated, Beam said. The startup has raised $32.4 million to date, a spokesperson told TechCrunch.

Beam, like Bounce and Yulu in India, offers electric scooters in the aforementioned five markets. Electric and gasoline scooters have become popular in several Asian nations and elsewhere as people look for alternative transportation mediums to move around faster and at less cost.

While these vehicles make inroads into various markets, it’s also not uncommon to find these scooters abandoned carelessly in the streets. Beam said unlike other startups, it incentivizes its riders through in-app offers to park the scooters at predetermined spots.

“I’m really excited about our new technology and its ability to reduce the problems associated with randomly scattered scooters around a city. This helps us to further improve our industry-leading vehicle retention rates, reduce operational costs, and most importantly, benefits communities by keeping city streets neater,” said Beam co-founder and chief executive Alan Jiang.

Beam, which did not disclose how many customers it has amassed, will use the fresh capital to grow its operational and engineering focus and grow deeper in its existing markets, it said. It will also “accelerate” the launch of its third-generation e-scooter, the Beam Saturn, which features swappable batteries, improved build, to more markets, it said.

Abheek Anand, Managing Director at Sequoia Capital India, said Beam’s collaboration with regulators, technology, and insights into the transportation landscape stand to give it an edge in the Asia Pacific region.

The startup’s fundraising comes at a time when many young firms, especially those operating in transportation category, in Asia are struggling to raise capital. Beam said it had implemented stringent cleaning and operations practices to limit the possibility of virus transmission to allay riders’ concern.

Google makes sharing Plus Codes easier in a push to simply addressing system globally

Two years ago, Google unveiled Plus Codes, a digital addressing system to help billions of people navigate to places that don’t have clear addresses. The company said today it is making it easier for anyone with an Android device to share those six-digit alphanumeric code.

Google Maps users on Android can now tap the blue dot that represents their current location to generate and share their six-digit coordinate with friends. (The codes look like this: G6G4+CJ Delhi, India).  Anyone with the code can look it up on Google Maps or Google Search to get the precise location of the destination.

More than 2 billion people on the planet either don’t have an address or have an address that isn’t easy to locate. This challenge is more prevalent in developed markets such as India where a street address could often be as long as a paragraph, and where people often rely on nearby landmarks to navigate their way.

Google is not the only firm that is attempting to simply the addressing system. London-based what3words has broken the world in 57 trillion squares and assigned each of those blocks with three randomly combined words such as toddler.geologist.animated that are easier to remember and share. The company told TechCrunch earlier that it had partnered with a number of firms including several carmakers to expand its reach.

But what3words and Plus Codes have both struggled to gain wider traction. When Google announced this project in India, its executives told this correspondent that they were exploring ways to work with logistics firms and government agencies such as postal department to get wider adoption — though none of it has materialized yet. At the time, the company had also tested Plus Codes at some concerts in India, they said.

To get wider adoption, Google also made Plus Codes open source so that people and businesses could find their own use cases. “If you’ve ever been in an emergency, you know that being able to share your location for help to easily find you is critical. Yet in many places in the world, organizations struggle with this challenge on a daily basis,” the company said today.

More to follow…

Google removes millions of negative TikTok reviews amid backlash in India

ByteDance’s TikTok app, which has gained hundreds of millions of users in India with its short-form videos, is facing criticism in its biggest overseas market after disturbing videos surfaced on the platform.

Phrases such as BanTikTok, DeleteTikTok, and BlockTikTok have trended on Twitter in India in the past three weeks after numerous users expressed disgust over some videos that were circulating on Chinese giant ByteDance’s jewel app.

Users unearthed and shared numerous recent TikTok videos on Twitter that appeared to condone domestic violence, animal cruelty, racism, child abuse and objectification of women.

The backlash has resulted in millions of Indians giving the app a one-star rating on its Google Play Store listing and posting poor reviews that are critical of the app. The app’s overall rating tanked from 4.5 as of earlier this month to as low as 1.2 — until Google intervened.

A Google spokesperson said the company removed millions of negative TikTok reviews that users had left as a corrective action to curb spam abuse. After this correction, TikTok’s rating has recovered slightly to 1.6. At one time, the overall “sentiment” of the app that in part describes a user’s satisfaction with the app based on its reviews, dropped from 86% to 39%, mobile insight firm Apptopia told TechCrunch.

Outrages over an app is not a new phenomenon. In India itself, there have been a handful of cases including an incident when an alleged remark made by Snapchat co-founder upset many Indians, many of whom mistakenly deleted — and left poor ratings for — Snapdeal e-commerce app.

But the new incident, which snowballed after Faizal Siddiqui (a social media influencer) posted a spoof video of an acid attack (for which he has since apologized), has put TikTok’s content moderation efforts on spotlight in India, where its app reached 200 million users late last year.

Maneka Sanjay Gandhi, an Indian politician, argued that TikTok was not following the Indian government’s order after lapses in its content moderation efforts became apparent this month.

In a statement, a TikTok spokesperson said, “keeping people on TikTok safe is a top priority and we make it clear in our Term of Service and Community Guidelines that clearly outlines what is not acceptable on our platform. As per the policy, we do not allow content that risks safety of others, promotes physical harm or glorifies violence against women. The behaviour in question violates our guidelines and we have taken down content, suspended the account, and are working with law enforcement agencies as appropriate.”

But ByteDance did not reveal how many content moderators it had in India and how proactively it removes objectionable videos — or if it does. Last year, TikTok grappled with a similar issue when Madras High Court ordered Google and Apple to block the app in the country over porn and other illegal content. The ban was lifted weeks later.

Ola Electric acquires Etergo, to launch own line of electric two wheelers this year

Ola Electric, the EV business that spun out of the ride-hailing giant Ola last year, has acquired an Amsterdam-based electric scooter startup as the Indian firm looks to locally produce and launch its own line of two wheelers as soon as this year.

The Indian firm said Wednesday it had acquired Etergo, a Dutch firm that has built a scooter that uses swappable, high energy battery that delivers a range of up to 240 km (149 miles).

Ola did not reveal the terms of the deal, but Etergo was valued at around $90 million in its previous financing round, a person familiar with the matter told TechCrunch. The six-year-old startup had raised €20.3 million from the market before its acquisition today, according to Crunchbase.

Etergo’s electric-powered two wheeler

The Indian firm, which gained the unicorn status last year when it raised $300 million, said it plans to launch its electric two wheeler in India next year, though TechCrunch understands that the company is internally hoping to reach the milestone by end of this year.

“This acquisition will further bolster Ola Electric’s strong engineering and design capabilities with the Etergo team’s extensive vehicle development experience with leading automotive companies like Tesla, General Motors, Ferrari, Jaguar, and BMW. Etergo’s team will continue to be based out of Amsterdam as they join Ola Electric,” it said in a statement.

More to follow…