Zomato starts own UPI offering, Flipkart to follow suit

Ecommerce major Flipkart has also started working on its own UPI offering, according to people aware of the matter.

For both Zomato and Flipkart, the move is aimed at servicing consumers better through their own UPI offerings, sources added.

ET had first reported in September last year that both Zomato and Swiggy were planning to join the UPI bandwagon with their own offerings for digital payments on the network.

Further, this is also a part of the broader attempt by the National Payments Corporation of India (NPCI), which manages the UPI network, to bring large consumer internet companies to the network to reduce dependency on Walmart-owned PhonePe and Google’s Gpay, which are currently the leaders in terms of UPI transaction market share.

NPCI had also proposed a cap on the market share of payment volumes for third-party apps with an aim to break the hegemony of PhonePe and GPay, which together hold over 80% market share. It had proposed a 30% cap on market share, planned to be implemented from December 31, 2022. However, this was deferred by two years.

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“There is a longer-term incentive for consumer internet companies to have their own UPI offering instead of depending on other payment aggregators. For companies that see millions of transactions every year, having your own payment product is a way of hedging against any potential merchant commissions that may be imposed in the future,” a person aware of the developments said. This will also help with payment downtime during rush hour on food delivery platforms — especially in the evening. In August 2021, Zomato had set up a subsidiary, Zomato Payments Pvt Ltd, to operate and offer digital payment services such as e-wallets, payment gateway services, and others. In 2020, Swiggy also launched its own digital wallet, Swiggy Money, in partnership with ICICI Bank. During the calendar year 2022, Zomato had 58 million annual transacting customers, up from 49.5 million in 2021.

Also read | Paytm CEO Vijay Shekhar Sharma expects more revenues from expanding UPI use cases

“Zomato has a large set of customers that frequently use UPI to make payments for their food orders. We are providing a facility (as a technology partner to ICICI) for customers to create a UPI ID on the Zomato app so that they can make payments seamlessly (without the need to switch apps). There are no plans to tie up with more banks in the near future,” a spokesperson for Zomato said, confirming the development to ET.

Flipkart did not immediately respond to queries from ET.

Zomato also offers customers the option of making payments through its app at some restaurants listed on its platform, through a product called Zomato Pay, using various options such as cards, net banking, UPI, etc.

Earlier this month, Noida-based fintech company Paytm, which is third in the UPI pecking order after PhonePe and GPay, indicated that expanding the use cases of UPI to instruments beyond bank accounts could lead to revenue generation for companies offering these services.

ET had reported that one of the reasons NPCI chose to extend the market share cap deadline was because it believed other players have not been able to scale up operations. Meta-owned WhatsApp Pay was being seen as a major challenger to incumbents Google Pay and PhonePe. However, it has not been able to build a meaningful share in UPI payments despite being allowed to take its payments services to 100 million users.

As part of the same broad approach, NPCI was attempting to bring on board consumer internet platforms with large user bases as third-party application providers. The Tata Group’s super app Tata Neu joined UPI last year. Other non-core fintech companies to offer UPI as third-party operators include Amazon, Makemytrip, and WhatsApp.