Adani Group plans digital payment services to rival industry giants

The UPI (Unified Payments Interface) space in India is set to heat up with the proposed entry of Adani as it forays into becoming part of the growing digital payments network and e-commerce business.

According to The Financial Times, the Adani Group is reportedly considering applying for a licence to operate on India's public digital payments network and is in discussions with banks to finalise plans for a co-branded credit card.

The group, led by billionaire Gautam Adani, aims to expand its digital presence by joining India's UPI network. Concurrently, Adani is negotiating to provide online shopping services through the Open Network for Digital Commerce (ONDC), a government-backed platform to enhance e-commerce.

The Financial Times reported that these initiatives are part of a broader strategy to establish a digital business capable of competing with major players such as Google and Mukesh Ambani's Reliance Industries. The new services are slated to be offered through Adani One, the group's consumer app that launched in late 2022 and currently provides travel services, including flight and hotel bookings.

Adani’s foray into consumer-facing businesses comes as the group seeks to recover from recent controversies. Last year, US-based Hindenburg Research accused the conglomerate of market manipulation and fraud, leading to a sharp decline in its stock value and increased scrutiny from political opponents.

Despite these challenges, Adani Enterprises’ shares have rebounded, regaining much of the lost value amidst what is being seen a tacit government support.

In a related development, the world's largest sovereign wealth fund, Norway's Government Pension Fund Global (GPFG), recently decided to exclude Adani Group's port arm from its investment portfolio.

The decision was influenced by the firm's sale of its Myanmar port last year, which GPFG cited as an "ethical consideration" and also pointed to the company's "lack of transparency."

The Adani Group's interest in digital payments adds to a series of new ventures and markets it is exploring. According to The Financial Times, the conglomerate also plans to establish a think tank focused on climate change, energy, and politics.

By targeting existing users across its diverse business portfolio, which includes gas and electricity customers and airport travellers, Adani aims to create a seamless ecosystem. Users could potentially earn loyalty points through bill payments or duty-free purchases, which they could then use for online shopping.

This strategy is viewed as an effort to leverage its large customer base to gain a foothold in the competitive digital payments and e-commerce sectors.

As of now, the Adani Group has not made any official announcement regarding its entry into the digital payments arena.

Leading banks in India, including State Bank of India (SBI) and Axis Bank, are gearing up to increase their share in the UPI market by introducing innovative features in their mobile applications that can be utilised by both customers and non-customers.

These efforts come as part of a broader strategy to challenge the dominance of existing UPI giants like PhonePe, Google Pay, and Paytm.

According to recent reports, SBI is set to launch a revamped version of its YONO platform, YONO 2.0. This upgraded application will not only offer banking services but also function as a marketplace where users can purchase products.  

“Even if you do not have an account with SBI, you can come on the application, register yourself, and start making UPI payments, much like what you would do on PhonePe or Google Pay,” said senior officials from SBI were quoted as saying.

The push by banks to penetrate the UPI payments segment is driven by the steadily increasing volume of UPI transactions. Data from the National Payments Corporation of India (NPCI) revealed that UPI transaction volumes surpassed 12 billion, with transaction values exceeding Rs 18 trillion, as of December.

Other major banks, including YES Bank, Axis Bank, and ICICI Bank, are also developing their mobile applications to attract non-customers. ICICI Bank's InstaBIZ app, for instance, also aims to provide mobile banking services that are accessible to customers of any bank.

This strategic shift among banks highlights their commitment to innovating and expanding their reach within the digital payments ecosystem, positioning themselves as formidable competitors in a space currently led by established UPI players.