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Making payments via Unified Payments Interface (UPI) is easy and completely free. Yet Google Pay and PhonePe together earned over Rs 5065 crore last year. How did they achieve this without selling any physical products? The answer lies in their unique business model which is built on trust scale and innovation. Let’s understand how their business model works. Voice-Enabled Speakers In Kirana Stores Mrinal Jhaveri Founding Partner of Ice VC shared a detailed LinkedIn post explaining how these companies generate revenue. According to them a large part of their income comes from small neighborhood shops (kirana stores). Apps like PhonePe earn profits from voice-enabled speaker services used at these shops. These are the speakers that announce transactions with phrases like Rs q0 received via PhonePe. Each speaker is provided on a monthly rental of Rs 100. With more than 3 million stores using this service the platforms earn about Rs 30 crore per month and Rs 360 crore annually. This helps them to build customer trust and also helps shopkeepers manage transactions efficiently. Scratch Cards: Advertising Tool Another major revenue driver is scratch cards which offer users small rewards like Rs 12 cashback or discount coupons. But these are not just for users but they are a new form of advertising channel for brands. Brands pay Google Pay and PhonePe to feature their names and offers through these cards and increase their visibility among millions of users. This provides dual benefits to the platforms and user engagement and brand revenue. This model works like an ROI-generating machine. SaaS Offerings And Lending Services These companies have also transformed UPI’s reliability into a Software-as-a-Service (SaaS) layer. They offer tools like GST help invoice generation and micro-loans to small businesses. While UPI was just the gateway the real business lies in software and financial services. The best part of this model is that it operates with zero Customer Acquisition Cost (CAC).