The council represents all the major payment companies in the country under the Internet and Mobile Association of India.
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“PCI is asking the Indian government to amend the existing laws to save and protect Indian startups and payment aggregators regulated by the RBI (Reserve Bank of India) from Google’s abusive and monopolistic policies just like South Korea and the European Union,” Vishwas said. Patel, Chairman of the Pay Council of India.
South Korea passed an amendment to its Telecommunications Business Act in 2022 and the European Union is implementing the Digital Markets Act to protect its local startups from big tech abusing its monopoly, said Patel, who is also joint managing director of Infibeam Avenues, which run by payment gateway CCAvenue
With more startups removing payment gateways from their Android apps to shift in-app transactions to their websites to comply with Google’s rules, the digital payments industry is concerned about the adverse impact on transaction volumes.
“The virtual services, virtual goods and online education category of 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.
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The issue came to a head last Friday when Google began removing a number of large consumer internet companies from the Android app store, saying they violated Google’s payment policies. Over the weekend, Google began bringing many of those apps back to the Play Store, but only after they completely removed payment functions from the platform to comply with Google’s standards.
Google announced on March 1 that its pricing policy applies to all players equally. More than 200,000 developers complied with the guidelines, while 10 companies, including several large ones, chose not to pay Google for services they received from the app store by getting temporary protection from the court, it said.
Google further said that these 10 developers followed the payment policies of other app stores.
“After giving these developers more than three years to prepare, including three weeks after the Supreme Court’s order, we are taking the necessary steps to ensure that our rules are applied consistently across the ecosystem, as we do for any form of rule violation on the global level,” Google said.
Payments industry executives said Google’s move could affect digital payment volumes, as churn could increase and affect user conversion. In many cases, consumers may not switch from the app to the website to purchase the service, they said.
“Google is clearly abusing its dominant monopoly over the Android operating system on mobile phones in India. Many of our members at PCI are RBI-regulated entities licensed as ‘payment aggregators’ to provide payment gateway services to Indian merchants for their stores, websites, apps, etc., through a single merchant account,” said Patel.
The payments industry expects disruption from the move, executives said.
“If the CCI (Competition Commission of India) rules are implemented, more apps could use payment gateways 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 combat Google’s pricing policy, the CCI asked Google in 2022 to offer more payment options. Google initially mandated in-app purchases through its own payment platform, for which it charged a 15-30% commission.
Another senior executive said that when the government offers Unified Payments Interface and RuPay debit card payments at zero cost to merchants, app publishers are feeling the pinch.
Patel further said that Google offers users a choice in billing, but does not offer two equal choices to end consumers. Google’s own Play Store billing system charges 15% of the transaction amount, and if the user chooses any other payment gateway, Google charges 11%, he said.
One of the executives quoted earlier said that compared to the larger volumes of digital payments, the transactions generated by these merchants would be small, but they account for a significant share of the industry.