How Does Google Pay Make Money?

You send money to a friend on Google Pay: no fee. You pay a shopkeeper by scanning a QR code: no fee. Hundreds of millions of Indians use it every month without paying anything.

So how does Google Pay make money? The honest answer: for years, barely at all from payments. Its income came from elsewhere, and Google treated it as a strategic bet. That's now starting to change.

🎯 Quick Answer (30-Second Read)

  • UPI payments have had zero MDR since 2020, so apps earned almost nothing per transaction.
  • Google Pay India reported revenue of ₹1,547 crore in FY25 (₹1,490 crore in FY24) and net profit of ₹50 crore, down from ₹110 crore.
  • In FY20, about 80% of its revenue was reimbursement from its Google parent, mostly to cover cashback rewards.
  • Direct earners today: merchant SoundPod fees, convenience fees on card-based bill payments, and commissions on loans and financial products offered through partners.
  • From 15 October 2026, a 0.4% MDR applies to some merchant UPI payments above ₹2,000, paid by the merchant. That creates the first real fee pool in UPI.

Google Pay in Numbers

₹1,547 Cr
FY25 revenue (Google Pay India entity)
₹50 Cr
FY25 net profit
~33%
share of UPI transactions (May 2026)
0%
fee to users on UPI payments

Why UPI Payments Don't Make Money

With card payments, merchants pay a merchant discount rate (MDR), a cut of each sale that's shared by the banks and networks. With UPI, the government set MDR to zero from 2020 to push digital payments. It worked: UPI now handles over 24 billion transactions a month.

But zero MDR means no fee pool for apps like Google Pay and PhonePe to share. Every payment costs them servers, support and fraud checks, and earns nothing directly.

Where Google Pay's Money Actually Comes From

flowchart TB GP["Google Pay India"] GP --> R1["Parent reimbursements
(historically the largest share)"] GP --> R2["Merchant devices
SoundPod fees"] GP --> R3["Convenience fees
card-based bill payments"] GP --> R4["Financial products
loans, credit via partners"] GP --> R5["MDR share from Oct 2026
select P2M payments over ₹2,000"] GP -.->|"strategic value"| G["Google
users, merchants, data,
Play & ads ecosystem"]

1. Reimbursements From Google

Inc42's analysis of Google Pay India's FY20 filings found that roughly 80% of revenue was reimbursement from its parent, Google Asia Pacific, mostly to cover cashback and scratch-card rewards given to users. Only 4.8% came directly from customers. In effect, Google funded user growth and booked it as revenue.

2. SoundPod for Merchants

The SoundPod is a speaker that announces "₹50 received" at shops. Google's help page lists a plan of a ₹499 one-time fee plus ₹5 a day (up to ₹125), deducted from the merchant's settlement. Device rentals are one of the few recurring incomes in UPI, and PhonePe and Paytm have similar devices.

3. Convenience Fees on Card Bill Payments

From early 2025, Google Pay started charging a convenience fee of about 0.5% to 1% (incl. GST) on electricity, water and gas bills paid with credit or debit cards. Bill payments via UPI from a bank account stay free.

4. Loans and Financial Products

Google Pay connects users and merchants to loans and credit offered by partner banks and lenders, and earns a share for distributing them. This is the same playbook rivals use: PhonePe's profits have come mainly from insurance and lending, not payments.

5. The New MDR (From 15 October 2026)

A 0.4% MDR now applies to some merchant UPI payments above ₹2,000, paid by the merchant, not the customer. Payments up to ₹2,000 remain free. For the first time, large UPI payments generate a fee to be shared across the ecosystem.

Watch out: how much of the MDR reaches apps like Google Pay depends on how it's split among banks, NPCI and payment apps. Treat early revenue estimates with caution until companies report actual numbers.

Why Google Keeps Investing Anyway

Google Pay's real value to Google isn't its own profit:

  • Daily habit: hundreds of millions of people open a Google app every day for payments.
  • Merchants: millions of small shops onboarded, useful for Google Maps, Business Profiles and ads.
  • Payments for Google's own products: Play Store, YouTube Premium and Google One purchases.

The Bigger Picture: UPI's Revenue Problem

Every UPI app faces the same challenge. PhonePe and Google Pay together handled about 79% of UPI transactions in May 2026, and NPCI plans a 30% cap per app (currently set for 31 December 2026). With zero fees on most payments, apps must earn from credit, insurance, investments, merchant services and devices, or from the new MDR on larger payments.

Frequently Asked Questions

Does Google Pay charge for UPI payments?

No. Sending money and paying merchants through UPI from your bank account is free for users. Google Pay charges a convenience fee only on some bill payments made with credit or debit cards, and the new 0.4% MDR on certain payments above ₹2,000 is paid by merchants, not customers.

Is Google Pay profitable in India?

Google Pay's India entity reported a net profit of ₹50 crore in FY25 on revenue of ₹1,547 crore, down from ₹110 crore profit in FY24. Historically much of its revenue was reimbursement from its parent company for user rewards rather than fees from users.

How do UPI apps make money if UPI is free?

They earn from financial products such as loans and insurance distributed through partners, merchant services and devices like soundboxes, fees on card-based bill payments, and advertising or rewards partnerships. From October 2026, a 0.4% MDR on some merchant payments above ₹2,000 adds a new fee pool.

Conclusion

Google Pay grew into one of India's biggest payment apps while earning almost nothing from payments. Its revenue came mostly from its parent, plus device fees, card bill-payment charges and financial products. The new MDR on larger merchant payments may finally give UPI apps a direct income, but for Google, Google Pay's biggest value has always been strategic.

Sources

Last verified: 14 October 2026.

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