“PCI is asking the Indian government to amend existing laws to save and protect Indian startups, payment aggregators (PAs) regulated by the RBI, from Google’s abusive and monopolistic policies just like South Korea and the European Union,” said Vishwas Patel, president of the payment administration. Council of India and Joint Managing Director, Infibeam Avenues which operates payment gateway CCAvenue.
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South Korea passed an amendment to its telecommunications law in 2022, and the European Union is implementing the Digital Markets Act to protect its local startups from Big Tech monopoly abuses, he added.
With more startups removing their payment gateways from their Android apps to redirect transactions from apps to their websites to comply with Google’s rules, the digital payments industry fears a major impact on transaction volumes.
“Virtual services, virtual goods, online education category merchants deactivate our payment gateways on their Android apps so that they don’t have to pay any money to Google. This will lead to a reduction in real-time payment transactions,” said Patel.
He further added that Google is clearly abusing its dominant monopoly over the android operating system on mobile phones in India.
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The issue boiled over on Friday when Google began removing several major consumer internet companies from the Android app store, saying they violated Google’s payment policies. Over the weekend, Google began bringing many of these apps back to the Play Store, but only after they completely removed their payment functions from the platform to comply with Google’s norms.
Payments industry insiders said this could affect digital payment volumes, as declines could spike and affect user conversion. In many cases, consumers may not go from the app to the website to purchase the service.
“Google is clearly abusing its dominant monopoly over the Android operating system on mobile phones in India. Many of our members in PCI are RBI regulated entities licensed as Payments Aggregators to provide payment gateway services to Indian merchants for their stores, websites, apps, etc. through a single merchant account,” added Patel.
The payments industry expects disruption from this move.
“If the CCI (Competition Commission of India) rules are implemented, more apps could use PGs instead and increase volumes, but that’s a long way off,” said a founder of one of the largest payments companies on condition of anonymity.
To fight Google’s pricing orders, the CCI asked Google to offer multiple payment options as early as 2022. Initially, Google mandated in-app purchases through its own payment platform for which it would charge a commission of between 15 and 30%.
Besides, when the government offers Unified Payments Interface and RuPay debit card payments at zero cost to merchants, these app publishers are feeling the pinch, another senior industry executive said.
Patel further pointed out that Google offers user-choice billing, but end consumers must be offered two equal choices, now Google’s own Play Store billing system charges 15% of the transaction amount and if the user chooses any other payment gateway, then Google charges 11%.
The executive quoted above pointed out that compared to the larger volumes of digital payments, the transactions generated by these merchants would be small, but still represent a significant share of the industry.