Payments company Freecharge has announced the launch of UPI based payments on its Android application. Freecharge users will now be able to make and receive payments via their @freecharge Virtual Payments Address (VPA).

Freecharge’s addition of UPI doesn’t come as a surprise because mobile wallets, like the one run by Freecharge, have seen a decline in usage over the past month as RBI’s stricter KYC norms have come into effect.

At first glance, Freecharge’s UPI application seems simple to use and interoperability doesn’t seem to be an issue. Users can make and recieve payments from other UPI IDs. Both online and offline merchant payment options are present and so is support for BharatQR, as mandated recently by the National Payments Corporation of India. Also present is the ability to make payments based on bank account number and IFSC code.

Freecharge, a big player in the mobile wallet space, used to be owned by e-commerce company Snapdeal, it was sold off to Axis Bank in July last year. While the company doesn’t make mention of it, we assume that it will be using Axis Bank to drive it’s UPI services.

UPI space getting crowded

As mobile wallets are seeing a slump in usage, the addition of UPI seems like a prudent move for Freecharge. But the UPI space is getting both crowded and competitive. On top of that, the interoperable nature of UPI means that customers move between apps, or use multiple apps as and when they see fit.

Google Tez, Paytm, the Flipkart owned PhonePe, Whatsapp’s payment service and the government-backed BHIM app are all going to be key competitors for Freecharge. Some like Paytm and Google Tez have tried to drive their numbers by offering cashback rewards for signing up, making bill payments or transferring money. Freecharge has not yet announced any such offers for its users but we wouldn’t be too surprised if it does so to drive up numbers.

UPI in numbers

There were 171.4 million UPI transactions made in the month of February, with Rs 19,126 crore being transacted in total. BHIM processed 5.8% of all UPI transactions. PhonePe accounted for 16% of all UPI transactions, whereas Paytm responsible for 40% of all UPI transactions. We can speculate that a major portion of the remaining 38% was driven by Google Tez and new entrant Whatsapp payments. Paytm used these numbers to claim the crown of the market leader in the UPI space for February.

PhonePe though had some interesting comments to make on Paytm’s massive lead when counting the number of transactions. PhonePe said while Paytm seemed “to be leading the market” in terms of the number of transactions, the average value of such transactions is much lower at Rs 38 compared to its own average transaction value of Rs 1,820.

The average PhonePe customer does about five transactions per month, while for Paytm that number is 525. The blog post claimed that the high number of transactions on Paytm was “simply not representative of normal user behaviour on the UPI network.”