Swiggy Launches UPI Service via Plugin to Reduce Dependence on Payment Apps

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Swiggy, the popular online food and grocery delivery platform, has introduced its own Unified Payments Interface (UPI) service. This move aims to minimize dependency on external payment apps, reduce payment failures, and streamline the checkout process. Currently, the UPI service is in a pilot phase and available to a select group of users.

Swiggy's New UPI Plugin

In collaboration with Yes Bank and Juspay, Swiggy has launched its UPI service through a UPI-Plugin. This approach differs from its competitor Zomato, which applied for a Third Party Application Provider (TPAP) license last year. Swiggy's decision to use the UPI-Plugin aligns with its strategy to reduce reliance on external payment apps like Google Pay, Paytm, and PhonePe.

Why Swiggy Chose UPI Plugin

The UPI-Plugin, introduced by the National Payments Corporation of India (NPCI) in 2022, allows merchants to offer UPI payment services without obtaining a TPAP license. This plugin helps reduce the risk of payment failures, especially when customers switch between apps in areas with poor network connectivity.

Swiggy's in-house UPI option aims to provide a seamless payment experience, allowing customers to pay directly within the Swiggy app. This reduces payment downtime and enhances user convenience, particularly during peak hours.

Benefits of In-House UPI Service

Offering an in-house UPI payment option allows Swiggy to gain valuable insights into consumer spending patterns and behavior. This data can be crucial for personalized marketing strategies and improving customer retention.

In 2020, Swiggy introduced its digital wallet, Swiggy Money, in partnership with ICICI Bank, followed by a co-branded credit card with HDFC Bank. The addition of the UPI service further strengthens Swiggy's financial ecosystem.

Rise of UPI Plugins

The UPI-Plugin simplifies the process for startups and merchants to offer UPI services. Becoming a TPAP requires multiple approvals from NPCI, including compliance and certification, which can take over a year. The UPI-Plugin, however, allows direct integration with banks, streamlining the process.

Several payment gateways have collaborated with banks to launch UPI Plugin SDKs (software development kits). For example, Razorpay's Turbo UPI and Yes Bank's HyperUPI, developed with Juspay, facilitate in-app UPI payments for merchant apps.

Industry Adoption and Future Trends

Experts predict a significant increase in the adoption of UPI plugins this year. While the progress has been gradual, many merchants have been experimenting with this technology in closed user groups. As more merchants become ready, the adoption rate is expected to rise.

Reducing Market Dominance

The move towards in-house UPI services aligns with NPCI's goal to diversify the UPI ecosystem and reduce reliance on major players like Google Pay and PhonePe, which currently control 85% of UPI transactions. NPCI has proposed capping the market share of these apps at 30%, with the deadline for implementation extended to December 2024.

Conclusion

Swiggy's launch of its UPI service via a plugin marks a significant step towards enhancing the user experience and gaining more control over payment processes. By reducing dependency on external payment apps and minimizing payment failures, Swiggy aims to offer a smoother and more reliable checkout experience. This initiative also aligns with broader industry trends and NPCI's efforts to diversify the UPI ecosystem.

For more updates on Swiggy's innovations and UPI trends, stay tuned to our blog.

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