Google Pay is testing UPI based transactions with unspecified point-of-sale (POS) providers to onboard retail merchants, reports the Economic Times. Currently, Google is running small scale pilots with retail stores, to rollout over the next few months, and gain momentum in this market, the report added. Google did not specify which cities it is testing this in.

In August last year, Google Pay partnered with POS machine makers Pine Labs and BillDesk, to make Google Pay available in more physical stores. Then, it also offered an in-app process for applying for loans for users with partnered banks.

In India, Google Pay launched in September 2017, and claims to have 12 million users, 25 million monthly active users and 1.2 million businesses.

Also read: Total number of POS machines grew 19% YoY to 3.59M in December 2018

Competition in the offline retail payments space

Google Pay’s push to onboard offline retailers and new users comes at a time when Indian payments company MobiKwik shut down two of its offices in India, laid off several employees, and scaled back its retail business in verticals like auto, milk and food and beverages. Sources told MediaNama then that high marketing and operational costs, lack of funding, competition and UPI and churn at the top leadership was responsible for this circumstance.

According to payments experts and sources, Paytm has dominated the offline payments space: In September last year, Paytm claimed that over 5 million offline merchants were accepting UPI payments, while its total base was 9 million offline merchants. It also said that offline transactions on its UPI platform accounted for more than 40% of its overall UPI transactions.

In November last year, PhonePe said that it crossed 1 billion payment transactions on its mobile app and 100 million users in June.

Offline merchant onboarding is expensive

Note that according to the same experts and sources cited above, offline retail payments can often be cumbersome for the on-boarding company. The payment company’s feet on the street have to sign retailers up, explain the process to them, link their bank and wallet accounts and either explain to them how to print QR codes depending on when they expire, or do it themselves on a regular basis. This becomes a cost intensive exercise.

Also read: Policy wars: After Whatsapp, Paytm trains its guns on Google Pay