PhonePe and Google Pay have emerged as the undisputed leaders of India’s digital payments revolution, scaling the Unified Payments Interface (UPI) ecosystem to billions of monthly transactions while enabling kirana stores nationwide to embrace digital payments seamlessly.
The Rise of UPI and Digital Payments in India
UPI, launched by the National Payments Corporation of India (NPCI), has transformed how Indians pay for goods and services. With its ease of use, instant transfers, and interoperability across banks, UPI has become the backbone of India's digital economy. As of July 2025, the UPI system processed a record 19.47 billion transactions in a single month, worth nearly ₹25.1 lakh crore, a staggering 35% year-on-year increase.
PhonePe: Leading the Digital Payments Charge
PhonePe, a Flipkart company, stands as the dominant player in the UPI payments market. It crossed the milestone of 2 billion monthly transactions comfortably, showcasing the fastest growth path in India’s digital payments space. In early 2025, PhonePe commanded nearly half of all UPI transactions, holding about 46.5% market share with 8.55 billion transactions monthly and close to 50% of transaction values, illustrating deep penetration far beyond metropolitan cities into tier 2 and tier 3.
PhonePe’s impressive reach includes over 335 million registered users and acceptance at more than 45 million merchant outlets—from tiny kirana shops to large retail chains—nationwide. Its app supports multiple payment functionalities, including P2P transfers, bill payments, mobile recharges, and merchant payments, offering a comprehensive ecosystem that keeps users engaged and merchants empowered. PhonePe’s innovations include affordable POS devices to enable digital payments for small merchants, making it a preferred choice for India’s vast offline economy.
Google Pay: Urban Strength and Kirana Integration
Google Pay has carved out a significant market share, holding around 35-36% of UPI transaction volume. While its traction is strong in metros among millennials and salaried professionals, Google Pay is increasingly focusing on smaller offline retailers and kirana stores. It has piloted technology enabling offline UPI payments where customers initiate transactions via their mobile number at the billing counter, bridging the urban-rural digital gap.
Google Pay leverages Google's trusted brand, sleek user interface, and integration with Google Search and Maps to increase discoverability of small businesses, helping kirana stores attract digital-savvy customers. This strategy aims to connect the “next billion” users to digital payments while expanding financial inclusion and convenience in everyday retail transactions.
Enabling Kirana Stores and Local Merchants
A pivotal element to the success story of PhonePe and Google Pay is their deep penetration into kirana stores and micro, small, and medium enterprises (MSMEs). By providing simple QR-based payment mechanisms, affordable POS solutions, and seamless UPI integration, these platforms have enabled small businesses across India to accept digital payments easily and securely.
PhonePe alone is accepted at over 45 million merchant stores across the country, underscoring its broad offline presence. Google Pay’s offline payment pilot programs signify its commitment to making UPI payments accessible even in low-connectivity or cash-dominant regions. This digital empowerment of kirana stores supports the government's vision of a less-cash economy and boosts MSME growth.
The Scale and Impact
Together, PhonePe and Google Pay account for approximately 82% of the total UPI transaction volume in the country, handling over 15 billion transactions monthly as of mid-2025. Their combined scale demonstrates not only technological robustness but also vast consumer trust and merchant acceptance.
Monthly active users run into hundreds of millions for both platforms, with billions of transactions facilitating everything from daily grocery payments at local kirana stores to large-ticket online purchases. Their leadership has driven an inclusive digital finance ecosystem reaching beyond urban centers, empowering users and businesses nationwide.
Looking Ahead
Despite challenges such as new transaction fee models by banks and the need for continuous innovation to cater to millions of new users, PhonePe and Google Pay continue to expand aggressively. Their focus on tier 2/3 towns, small merchants, and improving the digital payments experience remains central to India's digital payments future.
In summary, the success stories of PhonePe and Google Pay are testament to how visionary fintech innovation combined with robust UPI infrastructure has revolutionized payments in India. By scaling to billions of monthly transactions and enabling kirana digital payments, they have not only reshaped commerce but also propelled India's journey toward a digital-first economy.
This blog post encapsulates the incredible journey of PhonePe and Google Pay as UPI leaders facilitating the adoption of digital payments nationwide, especially within India’s vast kirana ecosystem, driving financial inclusion and digital convenience at an unprecedented scale.