Forbes India 15th Anniversary Special

Paytm takes on Google with launch of own mini app store

Already 300+ developers have signed up on the platform but can it take on Google's might?

Varsha Meghani
Published: Oct 5, 2020 05:21:44 PM IST
Updated: Mar 17, 2021 04:06:26 PM IST

Paytm takes on Google with launch of own mini app storeImage: Amit Verma

Days after Google booted Paytm out of its Play Store for allegedly breaching its gambling policy, the payments platform announced the launch of a ‘Paytm Mini App Store’. In full, front page advertisements in newspapers on October 5, Paytm – India’s biggest unicorn with a $16 billion valuation – called on startups to join its mini store and leverage its reach at zero cost.
The announcement also comes days after a coalition of 50+ Indian startups including Zomato, MakeMyTrip, and RazorPay, came together to protest against Google’s policy of levying a 30 percent fee on in-app purchases.

To be sure, Paytm’s mini store doesn’t replace the Play Store which is installed on more than 95 percent of India’s 500 million smartphones. So how does it work? Developers can list themselves on the mini store by creating a “mini app”—a website with app-like features. Paytm provides them with the tools to do so. Users meanwhile can access these apps within the Paytm app without having to download individual apps from the Play store. Payments for in-app purchases can be made via Paytm’s wallet, UPI or individual bank accounts and developers needn’t pay Paytm fee on such purchases.

“This enables us to achieve three things,” explains Narenda Singh Yadav, senior vice president, Paytm. One, it requires “very little investment and engineering effort” on part of the developers because they’re listing mini apps on the platform as opposed to full-fledged interfaces. Second, developers can leverage Paytm’s distribution network of 150 million monthly active users to widen their reach. And third, the 30 percent fee on in-app purchases that developers must pay on the Play Store is done away with, making it a more viable option for growing startups. “We’ve already seen huge excitement from developers,” says Yadav. More than 300 developers are presently on the mini store including e-pharmacy 1mg, FreshMenu and music app Hungama. Many more are expected to join after a conference for app developers organised by Paytm gets underway on October 8, says Yadav.

A sequence of events led to the launch of Paytm’s mini store. On September 11 in the run up to the Indian Premier League, cricket’s festival-like tournament, Paytm launched a campaign where users could collect cricket stickers and scratch cards by completing transactions like recharges, money transfers, utility payments etc. on Paytm. On collecting a certain number of stickers, users stood a chance to win UPI cashback offers. On September 18, Google pulled Paytm out from the Play store for violating its policy on gambling. In a blog post it explained that it did not allow “unregulated gambling apps that facilitate sports betting”. This includes apps that lead customers to an “external website that allows them to participate in paid tournaments to win real money or cash prizes.” Paytm promptly withdrew its offer and within hours it was back on the Play Store but it asserted that Google’s move was unjustified. “We wish to make it clear that driving traffic or promoting fantasy sports is not gambling!” Paytm said in a blog post. It also pointed out how Google Pay, Google’s payment app that directly competes with Paytm, ran similar campaigns in India. Simultaneously, 50+ startup founders came together to form a coalition to protest against Google’s apparent heavy-handedness in India, including its policies that benefit its own services and the 30 percent fee it charges for in-app purchases. The government too called for a “made-in-India” app store, according to media reports. Yadav, however, says that work on the mini store started a few months ago and “is not necessarily related” to the brawl with Google.

So can Paytm’s mini store succeed? “Paytm’s mini app store aims to bring about a large bouquet of services to users in an integrated fashion…we are proud to be among the initial partners,” says Vikas Chauhan, co-founder of 1mg. Another startup founder, however, who is part of the coalition, says, “I doubt it’ll take off. It’s not really an app store. It’s more like a webpage that leads to the webpages of the developers.” An investor at a leading venture capital firm who also spoke on the condition of anonymity said that unless regulations that benefit Paytm come into effect, he too doubts the long-term success of the mini store. “In China, for example, Google and its entire ecosystem is banned, so local companies have innovated and come up with multiple third-party app stores,” he says.

That said, there are concerns with Google’s operations in India. For example, in the US and the UK, online gambling apps are allowed on the Play Store because strict laws govern gambling and betting. In India there is no such law, save a Supreme Court order that legalises fantasy gaming. “Other than four states that have said it's illegal, why should Google come in the middle and be the gatekeeper?” asks the startup founder. He cites another example, “If you go on any Android phone and type ‘oay’, which is the most common typo users make when typing ‘pay’, or even if you correctly type ‘pay’, the first option that comes up is Google Pay, not Paytm. Ideally, the app starting with the word pay should come up first. There are many such examples the things Google does to benefit its own ecosystem.”

Meanwhile, soon after Paytm’s mini store launch, Google said it would defer the 30 percent in-app commission in India to April 2022. “It’s just a delaying tactic. It’s like the government putting a six-month moratorium on loans. You still have to pay your loans at the end of it,” says another startup founder.

The solution then to Google’s dominance is multi-fold. For one, the startup ecosystem “needs a voice”, which the coalition helps serve, says the startup founder first quoted. Second, competition laws need to be in place which prevent the misuse of market dominance. For example, if a third-party app store is installed on Google’s android operating system, it’ll let users download apps but not without flagging them as unsecure. Third, innovation by Indian startups is needed to develop viable third-party apps. Paytm’s mini store is then, perhaps, a first tentative step towards that.