How Third Party Applications Like Google Pay Earn Money?

Money transfer through UPI processors like Google Pay, Phone Pay, and Paytm is increasing fast in India. Users are finding it easy to pay via these applications.

The UPI service was introduced during Raghuram Rajan's tenure as RBI governor. Initially, all the banking companies introduced UPI processors separately. Later, third-party applications such as Paytm, PhonePay and GooglePay were added.

Banks do not have third party UPI applications. But also offer money transfer service in conjunction with more than one bank. These companies are also spending more money to make their applications more popular. So many banking companies have discontinued their UPI services. Some banks offer UPI service through their internet banking applications.

When banks provide UPI service, they earn less than that. Banking companies do not provide it to third party UPI service providers. But the question for many is how they get their income. About 60 per cent of retail transactions in India are done through UPI processors. 

Applications, including Google Pay and Phone Pay, increase revenue through commissions. Those commissions provide services such as mobile recharge, electricity bill, case fee, insurance payment, payment of movie ticket fees and earn commission from it. There is no commission when a Google Pay user sends money to another user.