Sachin Bansal’s Navi UPI grows 10X in two months

Navi UPI sees 10x growth in 2 months

Sachin Bansal's fintech and lending app Navi has grown its UPI payments 10 times in the last two months, helped by the handsome cashback rewards the company has been offering.

Navi clocked nearly 30 million UPI transactions in May compared to March, when it registered 3 million transactions. In April, the company clocked 15 million transactions.

The sudden spike in transactions lifted Navi from 27th position in March among top UPI apps to 11th position in May. If the bank apps are not considered for UPI ranking, Navi is already in seventh position. Now, Flipkart founder Bansal's fintech app is at a striking distance of surpassing WhatsApp Pay, the defacto messaging app in the country, which reported 36 million transactions in May.

Interestingly, even an app in the seventh position commands only a 0.2 percent market share in the UPI ecosystem. The two dominant players – PhonePe and Google Pay – together command 87 percent market share with third-placed Paytm taking a little more than 8 percent, leaving all other major 70 UPI apps to fight for the remaining 5 percent.

Navi is among the very few UPI apps that are incentivising customers for regular UPI payments while most others have reduced their cashbacks dramatically over the last couple of years.

"While our initial momentum has been fueled by our rewards and cashback programme, our customers remain loyal because of the fast and reliable user experience. As we progress, we remain dedicated to enhancing every aspect of the customer experience, building differentiated product features, and ensuring users enjoy the benefits of a world-class rewards program,” a Navi spokesperson said in an email statement.

Navi offers instant personal loans, home loans, bill payments, insurance, digital gold and mutual funds on the app. Unlike several other fintech apps, other than bill payments and digital gold, Navi is a manufacturer of these products and not a third-party distributor.

Kunal Shah’s Cred is among the UPI apps that are still offering cashbacks. Cred has seen its UPI payments grow more than three times in the last year from 45 million in April 2023 to 140 million in May 2024, which helped the app to double its market share to 1 percent this year.

Sachin’s trifecta of UPI connections

Navi is Bansal’s second attempt at creating a UPI platform after he did the same at Flipkart back in 2016. When the ecommerce giant wanted a mobile payments platform, it acquired PhonePe, which was among the first apps to focus on UPI payments when prepaid mobile wallets were still more popular for mobile payments in the country.

Flipkart always wanted an independent UPI platform for driving mobile payments. However, the company’s ownership of PhonePe did not give the company full freedom to invest in its own payment product until PhonePe was hived off in late 2022.

Earlier this year, Flipkart launched its UPI payments in beta and a full launch in March and the company registered 5 million transactions in the first month.In May, Flipkart again saw 4.5 million transactions, which are mostly facilitating payments for purchases made on the ecommerce platform.

So, Bansal is competing with both PhonePe and Flipkart UPI products.

Sustaining the momentum

A senior digital banker said that while the initial success is good, maintaining the growth or even the same number of transactions is going to be a challenge. While cashbacks act as a hook to bring in customers, once they start liking an app, they tend to use that in the future. At least, that is the thesis. However, the strategy has not worked for the uber-popular WhatsApp.

The messaging app promoted UPI payments with cashbacks in June 2022. This helped the company grow its transactions six-fold from 3.48 million transactions in May 2022 to 23 million in June. But in July, it came down to 6 million once the cashbacks were reduced. This implied that customers were shifting loyalties briefly to earn cashbacks.

To put Navi’s UPI numbers in context, ecommerce firm Amazon, which has had UPI payments for four years and had consistently rewarded customers with cashbacks until recently, has been doing around 65 million transactions a month.

“The real test for Navi is how it can manage the momentum once cashbacks dwindle. Unlike Amazon, WhatsApp or Flipkart, there is no regular use case for Navi, which is a big challenge,” says a fintech consultant, who did not wish to be identified.

While this initial success seems good, sustaining the momentum and keeping customer loyalty has proven tricky for even the apps with a much larger customer base.

For instance, Amazon was doing more than 70 million transactions during a few months in 2022, but then it dropped to about 55 million in 2023 before rising to around 65 million a month in 2024.

“Cred continued to grow at a rapid pace in UPI payments even after the value of cashbacks came down significantly by gamifying and offering engaging activities and other products and services,” said a senior banking executive who looks at digital payments.

The average transaction value of Navi is around Rs 340, which indicates that the app is being used mostly for merchant payments. The average value of a merchant transaction on UPI is Rs 632 whereas the average transaction value of a personal money transfer is Rs 2,845. Around 63 percent of all UPI transactions are merchant transactions.

For PhonePe and Google Pay, which have a relatively higher share of personal money transfers, the average transaction value is around Rs 1,500. However, there is no clear trend that a payment app used more for personal money transfers is likely to become a habit for customers.