Visit a mid-sized store in an Indian city, and you’d wonder if it exists to make any money. It might just as well be there to process transactions for half-a-dozen payment apps: PhonePe, Paytm, Google Pay, BharatPe, Amazon Pay and MobiKwik. Add up the merchants who have downloaded the digital services and the figure quickly reaches 80 million. A third of India’s 60 million-plus small businesses are using an average of four different platforms, according to Raman Khanduja, the chief executive officer of Mintoak, a Mumbai-based fintech.

“The neighborhood shopkeepers’ bandwidth is getting sucked into accepting money,” he says. “When do they run their business?”

There are several juggling acts going on here, apart from the millions of small businesspeople reconciling their accounts across the many services that have sprung up as an alternative to cash and plastic. The payment apps don’t make any money out of this activity because they all run on a shared public utility. What they get is data they can analyze to predict the creditworthiness of the small shops. It’s the banks that ultimately issue loans to these “thin-file” customers but fintech controls the flow of information — and gets remunerated by the lenders for finding creditworthy merchants. But why have the banks let fintech get between them and all these potential clients?Historically, depository institutions in emerging markets like India didn’t see much business in democratizing cashless payments. Card readers were costly pieces of hardware, and could only be deployed at shops that were well-established. These point-of-sales devices were also dumb: Even when the lenders got data about a store that was swiping a lot of cards issued by them, to advance money to a retailer based on that knowledge required multiple sales calls. It wasn’t worth the trouble then, and makes even less sense now that India’s digital revolution has put plastic in the shade. Credit and debit cards get swiped in two out of 10 transactions — usually for higher-value purchases and at bigger retailers.

But banks also fell behind in embracing payments on smartphones. They don’t have a tech DNA and the weight of their legacy infrastructure made their own online products clunky. Fintech, which was far nimbler and more willing to shower generous cash-backs at early adopters, jumped on the opportunity created by India’s six-year-old Unified Payments Interface. Using this highly popular, open-source protocol, mobile apps in India move funds in real time — using phone numbers for person-to-person transfers and QR codes to settle shopping bills. Nearly 2 billion such merchant transactions got done last month. The government mandates that all UPI transactions be free of charge.

Digital Beats Plastic | With nearly 2 billion smartphone-based payments to merchants in a month, India’s UPI, a shared digital utility, is far ahead of credit and debit cardsYou’d think the apps, looking for ways to make money from payments, would attack the banks’ deposit-taking franchise, then. They are, actually. BharatPe part-owns a bank and is thus in a position to lure retailers to switch their current accounts. Similarly, Alphabet Inc.’s Google Pay, the second-most-popular consumer wallet in India after Walmart Inc.-owned PhonePe, is using its sway to promote fixed deposits. If lenders lose control of both demand and time deposits, what’s even the point of their banking license?

Lending in a digital world is proving to be equally problematic. Banks aren’t intuitively geared to handle the unique requirements of small businesses. Suppose the salesperson for Unilever Plc’s local unit shows up at a store and says: “Since I have to meet my quarterly target, you can have another 5% discount if you pay upfront.” Traditional lenders’ internal processes are too slow to clear an immediate loan like that. What’s needed are pre-approved credit limits based on the borrower’s digital cash flows and innovative products like buy-now-pay-later — but for retailers. This is what banks have been missing out on. Now they want to reclaim the lost ground. But can they?

Perhaps. They’d have to come in as consolidators, leveraging the trust advantage they still have over fintech, which is hobbled by its own ubiquity. Because there are already so many apps on an average shopkeeper’s phone, each service obtains only a fragment of actual sales. “Nobody is getting enough data to offer meaningful financial services,” Khanduja says.

That’s why the former Visa Inc. executive, together with a couple of his colleagues, came up with the idea of Mintoak, a white-label merchant-payment platform for banks that can accept all digital payments as well as cash and cards. It produces a single report, leaving retailers free to run their business. Mintoak, which works with HDFC Bank Ltd. and State Bank of India, two of India’s largest lenders, earns a subscription fee and gets a cut on products that banks sell on the platform. HDFC Bank owns 5.2% of the startup.

India’s success in digital finance has inspired many emerging markets to design payments along similar lines, giving Mintoak a foothold in the Middle East and the prospect of its first client in Africa. “We want to reconnect banks with SMEs,” says Khanduja.

Payments aren’t the only way to tap small businesses. A vast chunk of the working capital retailers need is embedded in the inventory. This credit used to reach them informally via distributors of brands, but it’s increasingly being provided by e-commerce platforms like venture capital-backed Udaan and billionaire Mukesh Ambani’s JioMart app for neighborhood stores.

The U.K.-based Standard Chartered Plc has made an attempt to get into India’s business-to-business e-commerce with the hope of replicating the model in Kenya and other emerging markets. Most other banks, though, would rather stick to what they know. Luckily for them, none of the existing merchant-payment apps still has the revenue heft of a Block Inc. — formerly Square Inc. — in the U.S. Before a dominant player emerges in the fragmented market, India’s banks need to find their way back to the cash counter.

Google Pay can be safely termed as one of the most popular and easy-to-use apps for making UPI payments. Now, to further make things easier for you, Google Pay has introduced the “tap to pay” feature, which will save you the hassle of scanning QR codes in order to make UPI payments.

Google has collaborated with Pine Labs for the new “Tap to Pay” feature, and it will work with the Pine Labs POS (Point-of-Sale) machines and your NFC-enabled Android smartphones.

The new Google Pay feature will be similar to how you can tap your compatible cards on a POS machine to make payments, without typing in the PIN number. The difference is that you can now use the Google Pay app on your smartphone for this.

Sajith Sivanandan, Business Head Google Pay and Next Billion User initiatives, Google APAC, said, “Tap to Pay for UPI has profound implications for high traffic retail outlets, with queue management hassles poised to be greatly reduced, and taking digital payments at POS well beyond cards. We are very excited to bring this first-ever innovation to India, in collaboration with Pine Labs.“

For those who don’t know, Google Pay’s “Tap to Pay” was initially a pilot program, which was introduced at Reliance Retail. It is now reaching more merchants, including Starbucks.

In order to use “Tap to Pay,” you will simply have to tap your phone on the POS device, enter the UPI PIN when prompted to do so, and it’s done. The aim is to make the process much simpler and quicker.

One thing to note here is that for you to use this Google Pay feature, you should have an NFC-enabled Android smartphone. It might prove to be a drawback for many in India, considering NFC-enabled phones don’t usually fall in the budget price range. And well, this is the price segment that Indians rely on the most. Plus, there’s no word on when this feature will arrive for iOS users. We shall let you know once this happens. Meanwhile, do let us know your thoughts on the new “Tap to Pay” feature for UPI payments.

A new player is preparing to enter India’s crowded and yet duopoly-sided UPI payments market.

Bengaluru-headquartered Slice, which became a unicorn late last year, plans to introduce UPI payments for its users within weeks, according to a source familiar with the matter.

The startup is currently testing the new payments method within the firm, said the source and screenshots obtained by TechCrunch. The startup appears to also be redesigning the app to make UPI transactions intuitively straight forward with a new in-app navigation flow, according to the screenshots.

Slice’s embrace of UPI, a payments protocol built by a coalition of banks, comes at an interesting time.

Walmart-backed PhonePe and Google Pay currently lead the charts with UPI payments – that have become the most popular way Indians transact online today – but a rule that is set to go into effect soon will force them to concede some market share.

National Payments Corporation of India, the governing body that oversees UPI ecosystem, is also working to push new changes that are positioned to create a level-field among UPI players.

It’s working on a feature, called digital mapper, that will allow users to send money to one another by just using their phone numbers instead of relying on virtual payment addresses.

The governing body also plans to standardize the merchant payments experience on its payments platform by showing all UPI options at the checkout.

The NPCI’s forthcoming plans have reignited interest from several industry players to revisit how they perceive its payments ecosystem. Indian conglomerate Tata Digital is also planning to launch support for UPI on its forthcoming app, multiple people familiar with the matter said.

Screenshots show that Slice is working on introducing its web3 digital identity platform and also redesigning the app, both of which are going to work in tandem with the upcoming UPI rollout.

For the younger startup, UPI support is part of a broader plan to make Slice the “super-app” for its younger demographic’s payments needs, the first source said. Slice founder and chief executive Rajan Bajaj confirmed that the startup plans to launch UPI in the “coming weeks” but declined to elaborate.

Slice has become one of the largest card-using firms in the country, bandying out about 400,000 cards a month, according to a person familiar with the startup’s internal figures. On top of the fast-growth of its card business, Slice has also expanded its offerings in the past one year by broadening its rewards and also launching a card built for the masses.

It has also been testing social and microtransaction features internally, screenshots seen by TechCrunch showed, and has publicly shared its intention to launch a web3 identity platform.

“It has become second nature for us to jump between identities whether we are online or offline. What if we stop and think about one ID that can be used everywhere and is fully controlled by you? Picture an ID that can be used to accept payments, do KYC, make investments, apply for a visa, rent a car or even create a unique link to all of your brand’s social presence online — without any censorship,” Bajaj wrote in a LinkedIn post last year.

Slice’s UPI offering will be the first product to adopt &ID. When users sign up for the UPI feature on Slice, the startup mints an NFT against their usernames.

The remarkable growth and aggressive plans of Slice — which is backed by Tiger Global, Insight Partners and Blume Ventures — also explains the interest it has garnered from investors. The startup is in advanced stages of talks to close a new funding round that is set to more than double its valuation since the November financing round last year, the source said.

A set of new investors are positioning to lead the round, but TechCrunch could not determine their identity. Bajaj declined to comment on the startup’s fundraising efforts.