How Google Pay Makes Money - Business Model Study

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GooglePay is an online money transaction app was launched in August 2017. Google first named this app as “Tez” and later changed the name to Google Pay. This app has over 67 million monthly active users. Although this application is available in different countries but in India Google chose a more proactive approach, they are dominating it against tough local competition.

In India google pay use UPI(unified payment interface) as primary mode of transaction So, what is there source of income? As UPI transactions are completely free.

Google Pay currently does not earn any money for Google (Alphabet Inc). However, Google Pay has several revenue-making opportunities that can, after several years, make an estimated $4.5 billion a year. This revenue might be both from transaction fees from banks or merchants (~$4.1bn) and also from ads and product offers within Google Pay (~$0.4bn).

As we are focusing on the google pay business model for India, I have divided the business model of google pay in 3 categories.

1. Mobile Recharges - So how does Google pay make money from recharges?

The answer is simple Whenever a user recharges on any SIM operators from this app, then they get commission by that operator on every recharges.

2. Bill Payments – if you are using this app you know that You can pay any kind of bills from this app such as electricity, Dth recharge, water, insurance, loan repayment, postpaid bill, and so on.

Whenever you pay any company bill, it takes a commission from that company.

3. UPI Transaction – So this app does not earn from the UPI transactions,they just analyze your transaction data, which they use to make their new product.And the biggest reason is that most people use this app for UPI payments.But this app also provides more services such as mobile recharge, bill payment.so whenever people have to use both these services, they use this app and this app earns from both the services.

So, Will there be a more revenue opportunities for google pay in near future?

As of now Google is not focusing on monetizing their payment application. However, Google is working hard on Google Pay adoption. That can be seen in announced partnership with Citibank and new functionalities that is Google continuously adding to the service.

But what if one day they decide to monetize google pay. Ads or financial product offers within google pay 350m users worldwide and can able to generate $1 per year Which generates $0.4 bn. That why this is user base business model And if they start using ads targeting run personalize ads using transaction data. They be able to generate 10% more which is $11.7bn.

So, what do you think? Will Google Pay one day become revenue generating machine?