Can POP’s UPI+Commerce Playbook Dim CRED & Paytm’s Dominance In The UPI-verse?

Can POP’s UPI+Commerce Playbook Dim CRED & Paytm’s Dominance In The UPI-verse?

SUMMARY

Founded in 2023 by a former Flipkart employee Bhargav Errangi, POP is a Bengaluru-based fintech startup that is obsessed with outdoing Paytm to take the third port in the UPI-verse

POP enhances shopping and payments by combining UPI transactions with its unique rewards programme, POPcoins, just like CRED Coins

The company has raised more than $5 Mn and counts IndiaQuotient as its key investor. The startup has partnered with Yes Bank and Juspay to develop its UPI stack

Driven by the country’s technological prowess, digitisation efforts, a supportive regulatory regime, and the launch of the Unified Payments Interface (UPI) in 2016, India’s digital payment ecosystem has grown unhinged.

Launched by erstwhile RBI governor Raghuram G Rajan, UPI was first piloted in Mumbai with 21 member banks. The tech stack was introduced to address the challenges of traditional banking by creating a seamless platform that could allow fund transfers through mobile devices. 

Today, UPI has not only revolutionised traditional payment methods by eliminating the need for extensive details like account numbers or IFSC codes but also made digital payments accessible to all. 

Since its launch, the total volume and value of UPI payments have grown manifold. Notably, UPI transactions surged almost 46% to a record 17,220 Cr in 2024 from 11,768 Cr in 2023. Meanwhile, the total value of UPI transactions zoomed over 35% to INR 246.82 Lakh Cr from INR 182.84 Lakh Cr in 2023.   

Now, what has given a big push to UPI adoption in the country is the rise of fintech apps like PhonePe, Google Pay, Paytm, and CRED. Despite more than 77 mobile apps in the UPI ecosystem, only a few rule this space, with Google Pay and PhonePe holding the top spots

In the whole of 2024, Walmart-owned PhonePe dominated the UPI market with over 48% share, while Google Pay held the second spot with a 37% share. Paytm took the third spot, even though its market share plummeted in 2024 to 7.03% from 14.1% a year ago.

One of the biggest reasons for their dominance is the user “stickiness” these apps have created over the years. Now, in this cut-throat segment, a new entrant is aiming to create its own niche.

Founded in 2023 by a former Flipkart employee Bhargav Errangi, POP is a Bengaluru-based fintech startup that is obsessed with outdoing Paytm to take the third port in the UPI-verse.  

However, this is not the interesting part — what’s intriguing is that it plans to accomplish this with its unique UPI-plus-commerce proposition. 

Within just six months, the founder claims to have captured 0.2% of the market share and is on track to target 10% with its distinctive offering.

The startup’s core features include UPI payments, an integrated marketplace, and a credit card that accelerates the earning of POPcoins. 

POP enhances shopping and payments by combining UPI transactions with its unique rewards programme, POPcoins, just like CRED Coins. However, the founder thinks otherwise. (More on this later.)

Users earn POPcoins for every UPI payment made, which can be redeemed for products from top direct-to-consumer (D2C) brands across categories like beauty, electronics, fashion, and home goods.

POP works with over 600 brands, including Portronics, Bombay Shaving Company, Snitch, The Souled Store, Boat, and Yoga Bars, just to name a few.

POP has been approved by the National Payments Corporation of India (NPCI) to operate as a third-party application provider (TPAP), enabling UPI payments through its app, POP Club.

The company has raised more than $5 Mn and counts IndiaQuotient as its key investor. 

The startup has partnered with Yes Bank and Juspay to develop its UPI stack.

The Making Of POP

With nearly a decade of experience in ecommerce, Errangi was instrumental in establishing one of India’s earliest social commerce companies, Spoyl. Launched in 2015, Spoyl was a fashion ecommerce platform designed for Gen Z shoppers.

After successfully running Spoyl for over five years, the company was acquired by Flipkart in 2020. Post-acquisition, Errangi joined Flipkart as general manager of Shopsy, where he played a pivotal role in its inception and early growth. Within just four months, he scaled Shopsy to achieve a $1 Bn annualised GMV run rate.

Following his success with Shopsy, Errangi transitioned into a wider role at Flipkart, driving growth across emerging consumer channels. 

As a senior director, he developed and implemented the group’s customer growth strategies, focussing on everything from acquisition to retention. His efforts extended to enhancing the Flipkart Plus loyalty programme, growing Supercoins as a leading loyalty currency, and establishing Flipkart’s re-commerce division.

Although launching another startup wasn’t initially on his radar, Errangi began to notice how ecommerce was evolving. During his time at Flipkart, he closely observed emerging consumer trends and how the industry was preparing for a shift a decade later.

“New-generation commerce was taking shape, and I wanted to create a lifestyle destination that brought customers together around shared interests — whether in commerce, entertainment, or offline events. However, building a B2C company in India before 2023-2024 was still expensive,” he explained.

According to Errangi, while ecommerce in India had matured with robust demand, logistics, and infrastructure, a significant gap was building a loyal customer network.

Motivated by this, Errangi began conceptualising POP in mid-2022, leaving Flipkart alongside a few colleagues to pursue his vision. By early 2023, POP’s first product, POPcoins, was launched.

So, How Did UPI Became The Core Of POP’s Proposition? 

Soon after the founder started working on his initial idea, he realised that building the customer cross-category network was more of a thesis. 

“Building a network means reaching millions of customers, and you can’t just spend money on Meta ads back in 2014 or 2015. So, we thought we should build this network creatively,” the founder said. The question that got him was how to engage customers daily. 

He was sure that ecommerce isn’t a daily activity, but quick commerce is.

To build a strong, scalable customer network with repeat engagement, we needed a daily activity that would drive them to open the app. That’s when we realised UPI could be that large phenomenon, as it is fast, efficient and secure,” the founder of the fintech startup said.

Interestingly, another reason the founder became more confident in entering this space was that while existing apps like PhonePe and CRED were fast and secure, these were either dealing with revenue challenges or customer retention issues.  

This gave him the idea to shift to a payments-to-commerce approach, where the entry point to the platform would be UPI.

According to the founder, the core customer value proposition of POP is centred around rewarding UPI transactions. 

The plan was to create a ring-fenced D2C brand network alongside the marketplace, all tied together with a shopping currency called POPcoins. 

When users use the POP UPI instead of other payment apps like CRED, Paytm, or Google Pay, they earn 2% POPcoins on every transaction. These coins can be redeemed at hundreds of partner merchants, offering users the freedom to choose where to redeem them — unlike the voucher code model used by competitors.

To make this a reality, the startup obtained a UPI licence (TPAP), which took a few months. Following that, the development of tech took over six months, and after being audited by NPCI and RBI, POP became operational.

POP operates on a unique payments-to-commerce model that integrates payments with a curated D2C network. The platform is built on UPI, offering a high-velocity product that rewards users for every UPI transaction made on the app.

Currently, there are over 600+ brands and 1 Lakh+ SKUs available on the POP app. These brands come from a range of new-age companies, such as Mamaearth, Mcaffeine, Souledstore, and FixMyCurls. 

When users make purchases, they can redeem POPcoins for discounts. For example, if a product is priced at INR 500, it can be purchased for INR 400 plus 100 POPcoins, ensuring that the startup offers the lowest market price.

POP’s revenue model is built around three key channels. First is the commerce revenue model, where POP earns a commission (usually around 20%) on products sold through its platform. Second, the platform earns from credit card transactions through the Merchant Discount Rate (MDR). 

For every INR 20,000 spent on POP’s credit card, the platform generates around INR 150 in revenue. Once a credit card is activated, it creates a consistent, recurring revenue stream for POP. Additionally, POP charges a one-time activation fee of INR 1,000 per card. Another revenue stream is transactional fees from credit card usage, which generate ongoing revenue with every purchase made using the card. 

But, Is There A Need For Another CRED?

While POP’s business model may seem similar to CRED’s, the founder emphasises that POP is not trying to replicate CRED or any other existing players. POP is different from CRED in several key ways.

“One major difference is that POPcoins are closer to real currency, with a fixed value of INR 1. These coins can be redeemed across all selections on the platform and within the network. On the other hand, CRED coins are primarily used for non-commerce engagement, such as playing games or unlocking offers, and they do not have a fixed value.”

Furthermore, while CRED operates across multiple sectors like insurance, loans, and payments, with ecommerce being one aspect, POP is solely focussed on the payments-to-commerce conversion. The founder’s vision for POP is to carve out its own unique niche and capture 10% of the market share.

“While Google Pay and PhonePe dominate the top spots, there’s still room for new players. Paytm, for example, holds just 10% of the market share, and we’ve already captured 0.2%. Our goal is to grow steadily by introducing more products, features, and engagement tools. By mid-2025, we aim to be among the top 10 players in the UPI space,” the founder said.

Further speaking about the differentiation, the founder said that POP differentiate itself by the rewards it offers. Unlike cashback-driven apps, it focusses on creating a stickier reward proposition centred around new-age commerce and the consumption habits of the modern consumer. Besides, it is targeting a young audience. 

What’s Next For POP?

In terms of revenue, while the startup is new, it is currently processing 2.1 Lakh UPI transactions per day. It recorded a total of 6.4 Mn UPI transactions in December 2024. The startup is currently processing close to 10 Mn UPI transactions per month and is already among the top 25 apps in the UPI space. By next month, its goal is to break into the top 20.

The platform is also handling 1,500 ecommerce orders daily, contributing to an annualised GMV of INR 30 Cr on its ecommerce platform. Additionally, it is issuing approximately 4,000 credit cards per month.

In the short term, POP aims to reach 100 Mn transactions per month. Additionally, the company is targeting to onboard 1 Lakh active POP credit card users within the next four months.

It aims to focus on expanding its brand network and introducing more credit products, including a secured credit card. Along with this, the startup plans to grow its merchant network, both online and offline, with the intention to partner with large enterprise brands like food delivery services and event platforms.

“This expansion will allow customers to redeem POPcoins across a wider range of merchants, making the POPcoin ecosystem more robust and accessible,” the founder said.

While many things might have worked in favour of the founder so far, the biggest challenge that the founder has been facing is convincing consumers to switch from apps like PhonePe and Google Pay to POP and make it their primary UPI app. 

“Since money is involved, building trust is crucial. The startup is overcoming this by offering more value than existing players,” he added.

Although still in its early stages, it will be interesting to see how POP competes for a top spot in the UPI market, which is currently led by PhonePe and Google Pay.

[Edited By Shishir Parasher]

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