Market Insight

Google ramps up in India with mobile payments app Tez

September 22, 2017

Ruomeng Wang Ruomeng Wang Research & Analysis Manager, Security - Fintech & Blockchain

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Google launched an audio QR code-based mobile payments app in India. The new service “Tez” will allow customers to make in-store and online mobile transactions by using ultrasonic sounds authorisation, mobile numbers or email address.

Google has partnered with 55 banks via India’s UPI (Unified Payments Interface) network and Tez is available for both iOS and Android users in India.

Mobile payments services on the UPI network will have the transaction limit of IR100,000 ($1,561) in one day and 20 transfers per day.

Our analysis

Launching Tez rather than Android Pay highlights unique Indian market features

Google has expanded Android Pay into 14 countries, but India is still missing from its list. According to IHS Markit, the smartphone installed base in India was 320 million by the end of 2016. From this total, 270 million were addressable devices for Android Pay, whilst seven million were addressable for Apple Pay and five million for Samsung Pay. Although Google has a relatively large share of addressable devices for Android Pay, the low penetration of bankcard and NFC infrastructure in India is holding back Android Pay’s launch in this territory; this also explains the absence of an Apple Pay launch in India. Samsung Pay is the only device-based mobile payments service that has launched in India, thanks to its magnetic stripe technology and partnership with Paytm. This has helped Samsung to offer users more options to make payments, thereby avoiding using NFC and other obstacles faced by Android Pay and Apple Pay.

India is a market that Google can’t afford to miss, with Android devices having reached 94% market share in Q4 2016, according to IHS Markit. As Android Pay is not the perfect match for the Indian market, Tez’s launch is a strategic step for Google to enter into Indian mobile money market and take advantage of its high smartphone penetration and increased move to digital and mobile payments. The combination of audio QR code and transactions through mobile numbers and email addresses will be more convenient to use without the need of tapping and scanning to complete transactions.

India’s mobile payments market is growing with the government’s support

The Indian government has been promoting a shift towards digital transactions as part of its demonetisation policy since late 2016 and it has developed the UPI system that integrates multiple bank accounts into a single mobile application. This enables immediate mobile transfer through mobile devices and encourages more mobile payments players to join the market. Meanwhile, competition among mobile payment providers is increasing; local mobile payments and wallet service Paytm claims more than 200 million registered users, card networks Visa and Mastercard have also launched their own QR code-based mobile money services in India.

Compared with existing mobile payments services in India, Tez’s audio QR code technology is a novel strategy to allow users to bypass NFC and even QR codes. Google is also leveraging its manufacturer partner networks to increase Tez’s user adoption, as Lava, Micromax, Nokia Mobile, and Panasonic will be preloaded with Tez. However, the partnerships with local merchants and financial institutions will be significant to increase use acceptability.

Tez to add value to Google’s wider ecosystem

Tez is free for users and merchants to use at launch and offers incentives when users invite their friends to join Tez, which highlights that Tez is focusing on user acquisition at this stage. With the fierce competition in India, incentives will be key to driving user adoption and converting users from other mobile money services.

Tez is positioned for markets with relatively low NFC penetration. If Google expands Tez to other Asian and emerging countries, it would increase Google’s presence in m-commerce and add value to Google’s wider ecosystem in the long term, such as driving advertising revenue, adding profit-making commerce and financial services and integrating with social media platforms.

Research by Market
Mobile & Telecom
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