Alphabet’s (GOOGL - Free Report) Google is leaving no stone unturned to bolster its position in the online payment market of India.
The search giant recently introduced the long-awaited gold financial service via Google Pay. Google has teamed up with bullion refiner, MMTC-PAMP, for the same.
The deal will allow Google to enhance its offerings for Indians, who splurge on gold during auspicious occasions. The app users will be allowed to buy 99.99 per cent 24-karat gold and sell it any time at the up-to-the-minute price that will be displayed on the app.
Notably, the users’ purchased gold will be stocked by MMTC-PAMP in secure vaults. This bodes well for the company’s aggressive plan to introduce a gold-linked savings account.
The latest move of the company is likely to boost the adoption rate of Google Pay in India, which in turn will drive market share.
Indian Digital Payment Holds Promise
The online payment space of India is booming owing to the widespread digitization drive in the country. Moreover, the increasing penetration of smartphone and Internet is playing a vital role to drive this particular sector.
Further, the demonetization policy adopted by the government of India has compelled Indians to adopt cashless transactions, providing a significant boost to the digital payment sector.
Per Statista, the sector is expected to generate $64.8 billion in 2019. The figure is likely to hit $135.3 billion by 2023, at a CAGR of 20.2%.
With India being the second-largest consumer of gold in the world, Google’s aim to launch a gold account in that country, which will allow Google Pay users to maintain their gold balance and convert it into cash or gold coins at the time of withdrawal, is expected to help it rapidly penetrate this market.
Additionally, the company abides by all legal norms in India, regarding its latest gold initiative. Consequently, this will help the company gain traction among the people who seek to invest in gold.
Intensifying Payment Battle
The rapidly increasing number of digital transactions makes the digital payment sector in India highly competitive.
Moreover, the demand for gold in India has not only encouraged Google, but also Walmart (WMT - Free Report) -owned Flipkart’s PhonePe and Paytm, backed by Berkshire Hathaway, which have already launched their gold services in that country.
Paytm Gold is gaining popularity with its gold gifting and Gold Savings Plan facilities. Further, the company is running promotional campaigns to boost sales of digital gold.
Although Paytm and PhonePe enjoy the first mover advantage in gold initiatives, Google Pay ups the ante against them with support from MMTC-PAMP, which is the only LMBA accredited gold refiner.
Moreover, Google is expected to give tough competition to Amazon (AMZN - Free Report) and Facebook (FB - Free Report) in the India digital payment space, since Amazon Pay and WhatsApp Pay don’t offer any gold financial services yet.
Currently, Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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