Google Tez: Two Reasons Why The New Google Mobile Payments App Threatens Visa And Mastercard In India [Update]

Update on October 5, 2017: Flipkart is making an investment of $38.7 million in PhonePe, its digital payments unit. PhonePE is an online payment system headquartered in Bangalore, India. This comes at a time when Google has entered the Indian mobile payment arena and competition has become fierce as the existing platforms battle to remain relevant in the face of new technology.

Google Tez was unveiled as a mobile payments app specifically for the Asian market in mid-September. This free mobile wallet uses Audio QR (ultrasonic sounds) to allow users to link their phones to their bank accounts to pay for goods and services. Tez, meaning "fast," is connected to several major banks in India via the Unified Payments Interface, which is the payment system standard in India. According to Tech Crunch, this peer-to-peer money transfer system negates the use of NFC in a country where NFC-enabled phones never really penetrated the market.

How does Google Tez undermine Visa and Mastercard?

  1. Eliminates The Need For Visa or Mastercard & POS Terminal When Paying

When a customer uses Google Tez to make a payment, their bank account is directly accessed with no card required. No point of sale terminal is needed because the Audio QR technology links the two phones to each other, which is also a bonus for the merchant as he does not have to pay fees on the transaction itself. Thus the use of debit or credit cards is made redundant. Users use their phone and a six-digit pin to pay the merchant for the transaction, all in less than 20 seconds, proving that it is indeed a fast alternative to traditional payment methods.
  1. Beats The Competition By Streamlining The Process & Protecting Privacy

According to Seeking Alpha, Paytm is the mobile payments app giant in the Indian market. However, Google saw that the process in India could be streamlined to provide a more efficient service. Paytm requires the phone number of the merchant or the recipient for the payment transfer to go through. The amount transferred can then only be used on the Paytm app, unless the user is willing to pay surcharges for the money to be transferred into a bank account.

Therefore, Google Tez is more private than Paytm, since one doesn't need to share their phone number for a transfer to be made. The app is already immensely popular, with more than 1,000,000 downloads, according to the Google Play Store.

[Featured Image by Tez by Google/Facebook]