Fintech Startup Pop Disrupts India's UPI Market with Innovative E-Commerce Rewards
August 26, 2024 - Bengaluru, India - Fintech startup Pop, founded by a team of former Flipkart employees, has quickly made a name for itself in the highly competitive Unified Payments Interface (UPI) market. Within just two months of its launch, Pop has achieved a monthly run rate of one million transactions and aims to be among the top ten UPI apps in India by the end of this year. The company's innovative approach to integrating e-commerce rewards with UPI transactions is driving its rapid growth and positioning it as a potential disruptor in the financial technology sector.
Pop's Innovative Approach to UPI Rewards
Since its launch, Pop has facilitated more than 1.5 million transactions, leveraging UPI—a real-time payment system developed by the National Payments Corporation of India (NPCI)—to create a unique user experience. What sets Pop apart from its competitors is its rewards system, "Popcoins," which is funded by merchants and can be redeemed to purchase products from a wide range of direct-to-consumer (D2C) brands. These brands span categories such as beauty, personal care, electronics, fashion, and home goods, all available within the Pop app.
Bhargav Errangi, founder of Pop and former senior director at Flipkart, explained the company’s strategy: "At Pop, we have always focused on sustainable business growth. With UPI transactions soaring, we saw the need for a business model innovation. We are offering credit card-style rewards on UPI, funded primarily by merchants. Pop rewards customers with 2% Popcoins on every UPI transaction, which can be redeemed for competitive discounts across over 500 new-age brands on our app."
For more information, you can visit The Economic Times.
The Rise of Pop in a Saturated Market
Pop's entry into the market comes at a time when UPI transactions in India have reached unprecedented levels. In July alone, there were 14.4 billion UPI transactions, dominated by Walmart-owned PhonePe and Google Pay, which together account for over 85% of the market. Despite this saturation, Pop's strategy of combining payments with e-commerce rewards has enabled it to carve out a niche. The company’s approach not only incentivizes UPI transactions but also drives traffic to its platform, creating a synergistic effect that benefits both users and merchants.
The app's reward system is proving popular among users, with over 20,000 monthly e-commerce orders being driven by Popcoins earned through UPI transactions. Pop expects this number to grow exponentially, aiming to reach one million monthly orders by the end of the year.
Challenges and Opportunities in the UPI Market
The UPI market in India is highly competitive, with major players like PhonePe, Google Pay, and new entrants such as Super.Money, the fintech arm of Flipkart, vying for dominance. Super.Money recently launched its credit-first UPI app after a successful beta phase, quickly achieving 10 million transactions. This intensifying competition is creating both challenges and opportunities for new entrants like Pop.
While the market is crowded, the growth of online purchases, especially post-pandemic, has led to a surge in online-first D2C brands. These brands, which are particularly popular in categories like personal care, food, and apparel, are facing high customer acquisition costs due to increased competition for online advertising space. Pop's platform offers a cost-effective alternative for these brands to reach new customers by integrating loyalty programs directly into the payment process.
Brands like Perfora, Slurrpfarm, Anveshan, and Khadi Essentials have already partnered with Pop, utilizing Popcoins to power their loyalty programs and drive customer engagement. This partnership not only provides value to customers but also helps brands build a loyal customer base without the steep costs associated with traditional advertising.
For more on the growing competition in India's UPI sector, check out Bloomberg.
Looking Ahead
As Pop continues to grow, its innovative approach could potentially reshape the UPI landscape in India. By integrating e-commerce rewards directly into UPI transactions, Pop is not only challenging established players but also redefining what a UPI app can offer. The company’s ability to scale and attract both users and merchants will be critical to its success in achieving its goal of becoming one of the top ten UPI apps in India by the end of this year.
With its focus on sustainable growth and innovative use of merchant-funded rewards, Pop is well-positioned to capture a significant share of the UPI market, proving that there is still room for innovation and disruption in India's rapidly evolving fintech ecosystem.