Swiggy launches UPI service via plugin to reduce dependence on payment apps

Swiggy did not immediately respond to queries.

A fairly new alternative, UPI Plugin was a product launched by National Payments Corporation of India (NPCI) back in 2022, that eliminates the need for merchants to get a TPAP license to start UPI payments service within their app.

The risk of payment failures rise when customers have to hop to a different app (like Google Pay or PhonePe) to make the payment, especially when the network connectivity is not good.

Besides popular payment apps like Google Pay, PhonePe and Paytm, non-payment platforms like Zomato, Flipkart, Goibibo, MakeMyTrip, TataNeu among others had taken the TPAP licensing route to offer the UPI payment service in-house.

However, the same can now be offered via UPI Plugin wherein merchants/platforms can directly avail the APIs from banks or gateways. Apart from Swiggy, Online pharmacy platform Apollo 247, Zerodha's Coin app, Ola has also launched the UPI Plugin for their customers.

Swiggy in-house push

The idea to offer an in-house UPI payments option to customers is to eliminate the need for redirection to other apps like Google Pay, Paytm, or PhonePe when ordering food or groceries, similar to what Zomato introduced in May last year.

With this, customers get an option to pay their food bills directly using their Swiggy UPI account, also reducing payment downtime, especially during rush hours.

Further, an industry expert notes that the in-house service gives these platforms access to consumer data, including their spending patterns, frequency of the spends, etc., which they may not be able to obtain by relying on third-party payment aggregators.

In 2020, Swiggy also launched its own digital wallet, Swiggy Money, in partnership with ICICI Bank, and a co-branded credit card with HDFC Bank last year.

Rise of UPI-Plugin

Technically any startup or merchant can become a TPAP like PhonePe or Google Pay. However, it requires multiple approvals from NPCI, involving paperwork, compliance and certifications, all of which could take more than a year.

The certifications are usually for multiple issues such as maintenance, risk management, customer support and dispute management.

In a bid to resolve this, NPCI introduced the UPI Plugin concept in 2022, allowing banks to integrate their applications with the merchants directly and accept payments.

Payment gateways have further collaborated with banks and NPCI to launch various UPI Plugin SDKs (software development kits).

For instance, Razorpay launched its UPI Plugin named Turbo UPI mid-last year. This plugin was integrated with Razorpay’s partner merchants, such as online travel aggregators Ixigo and Trainman, allowing them to offer in-house UPI option.

Similarly, Yes Bank had partnered with Juspay to launch a plug-in called HyperUPI-- that facilitates in-app UPI payments for merchant apps.

"You will see more merchants availing these UPI plug-ins this year. Many banks and gateways had launched this previously but the progress has been slow till now as merchants have to be ready. Most of them have been experimenting with this in closed user groups," an industry expert said.

The larger trend

The trend of having in-house UPI access for large internet firms also runs in parallel to NPCI's attempt to bring more players into the UPI railroad to reduce over-dependency on a few selected players.

Presently, Google Pay and Walmart's PhonePe control 85 percent of all UPI transactions. NPCI had proposed to cap the market share of payment volume of these apps to 30 percent, the deadline for whose implementation was extended to December 2024. Moneycontrol had reported that NPCI is likely to extend the deadline because of implementation challenges.