Define a strategy of loyalty program for Google Pay.

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Answers (6)

Clarifying questions

  • Is this for B2C users and not for merchants? For this answer, assuming that it is

  • Assumption – Is the goal is to increase number of transactions and average transaction values?

Customer segments to focus on

  • Users who transfer funds to other users and make payments to businesses using Google Pay can be segmented based on the volume and value of payments to businesses into High, Medium, and Low.

  • The target segment for this feature would be users with high volumes of payments to merchants.

Use cases/requirements

I would like to first look at how Google Pay currently incentivizes its users. It provides coupons after a certain number of transactions that either give cash to the user or can be used for a vendor.

In some ways, there is already a loyalty program in that as your transactions increase, you get a reward.

The difference between the current system and a proper loyalty program is that in a loyalty program, the terms would be clear upfront. The loyalty program has to offer greater benefits as the volume and value of transactions increase. The rewards need to be guaranteed and not a lucky draw model like the coupons Google Pay currently provides.


Ideally since this is a loyalty program, at the start when a user opts into the loyalty program, there should some sort of fee or buy-in which will encourage stickiness as there are many competitors to Google Pay. This fee could then be refunded through points on meeting certain targets.

Each transaction would generate a certain percentage of the transaction value as points. The points could be used to purchase coupons similar to the ones Google Pay provides today on the platform.

The transactions that would generate points would be payments to merchants registered on Google Pay and not payments to individuals. I am not aware of whether Google Pay collects a percentage of every payment at a registered merchant, but it is important to incentivise payments and not fund transfers.

Google Pay could have tie ups with prominent platforms like Amazon for which coupons could be purchased on Google Pay using the points collected.


This can drive transactions at merchants much better than the current incentive system.


This will put it in direct competition with credit cards.

Credit cards make money on every transaction done at a merchant. If Google Pay does not make a similar cut, it could lead to a significant cash burn.


Assuming that the objective is to drive the usage of Google Pay for purchases at merchants, I would go with the above approach of having an initial buy-in fee and then providing a certain number of points based on the transaction value. This can drive significant increase in usage as the user is clear on the benefits over time and each transaction contributes to his/her rewards.

Measuring the impact

The metrics that would have to be tracked are:

Percentage of users buying into the program

Number of merchant payments per loyalty program customer

Revenue from merchant payments (Depending on whether Google Pay does collect a percentage of the sales)

Revenue per loyalty program customer

Strategy of loyalty program for Google pay

What is Google pay ?

– Google Pay is a digital wallet platform and online payment system developed by Google to power in-app and tap-to-pay purchases on mobile devices, enabling users to make payments with Android phones, tablets or watches.

What are the countries in which it is available ?

Available currently in 29 countries including India, USA, France, UK, Hong Kong etc

What are the use cases of Google Pay ?

– Make payments to Public transport system

– Make in-app purchases

– Use mobile phone to scan QR codes and make payments

– Digital Wallet functions

– Make utilities payment

– Ecommerce purchases etc

What is the business objective (for Loyalty) ?

– Achieve more repeat usage of G-pay

– Network effect i.e. more people must interact with one another using their wallet

What is the primary user personas (with respect to Loyalty)

– young, m/f, age:22-32, professionals

What are their unmet needs ?

– Must be able to spend more

– Must be able to show-off to their family and friends

Design of the Loyalty program –

– Incentivize the users for repeat usage e.g. provide access to an exclusive Google Pay club in case their usage exceeds X #times in a given month

This incentive must be in a tiered fashion e.g. Silver, Gold, Premium Gold

– Set triggers and flash promotions e.g. every user that transacts using Gpay between 8-9 am of each day can win upto $XXX (a large amount)

– Reward users when their share their purchase using Gpay online (or offline)

Users can have a specific code that their friends can use during their purcahse cycle to avail discount

– Another set of incentives and triggers must be set when the users share messages and deals amongst each other (via messages)

Risks –

– The loyalty program can be ‘hacked’ in certain unexpected ways to avail more discount

– Users can send ‘fake messages’ to each other in order to get discount

– Users can simple make more transactions and then revert/cancel their transactions

Go to Market –

– The program must be launched on an ‘invite only’ basis in a particular country

for example, each of the users in India can invite only 20 of their friends

– The feedback and buzz around the launch must be measures (via metrics) and then scaled (after tweaks if required)

– A strong set of ‘channel partners’ must be created via tie ups with trusted brands so that the users can be incentivized

Phase 2 of the launch

– Scale to worldwide audience

– Launch in new crountries with the Loyalty program in-built

– Add more #Channel Partners

– Add gamification i.e. action –> Reward –> Progress to the loyalty program

Assumption : Product we are talking about is Gpay in India ( supports UPI based payment method)
Types of users :
  • consumers
    • students
    • working professionals
    • other dependent family members
  • merchants
Let’s focus on the consumer, specially working professionals. That’s where you will find majority of the users.
Goal of the loyalty program:
  1. user should do wide variety of category of transactions
  2. User should do higher number of transactions
  3. user should higher higher amount per transactions
  4. user should get more people on to platform
Loyalty can be achieved by great customer service or locking in customers with great discounts.
Given the competitive market where in PhonePe and Paytm are also aggressive, we do not have an option but to use both strategies. Loyalty should also be about increased value with more tenure of the user (something which should not be buyable).
Working professionals can potentially use the Gpay for multiple use cases
  • Gpay as a payment method in 3rd party transaction
    • E-commerce
  • Recurring payments
    • Credit Card
    • Bills
  • P2P transactions
    • Payment to their friends for splitting the bill
  • P2M transactions offline
    • Payment to small shops (kirana, etc )
Loyalty :
let’s break the possible activities into buckets
  1. Recurring Payments : Rewards for keeping gpay payment mode for recurring activities
    • e.g. Electricity bill paid every month
  2. Keeping Gpay as default choice for all payment modes on 3rd party sites
    • e.g. Payment on e-commerce
  3. extra reward for threshold per month to cross cross in terms of transaction value.
    • e.g. If a user crosses a transaction value of 10,000 on gpay, give reward
  4. extra reward for referring new people
  5. first time extra reward on the usage of any new service
    • e.g.Extra 200 INR cash back for storing credit cart and paying the bill
Also users need to be divided bronze, silver, gold basis their usage of gpay. i.e. Function ( number of transactions, value of transactions ) on platform
  1. Provide differentiated service and reward basis the cohort of users.
    • e.g. Gold users to get any query resolved within 2 hours.
    • e.g. Gold users to get additional reward than bronze customers
Let’s keep reward in the points which can be convertible to cash. Advantage being these reward points collected over a period of time can be used for various other services on google (when google comes out with loyalty program for their entire suite of products, users can use these reward points to get extra space on drive).
Success metrics :
  • DAU/MAU for reach of the services offered (gold vs silver vs bronze)
  • Total transacted value of users per day/month (gold vs silver vs bronze)
  • total cash burn/reward burn (gold vs silver vs bronze)
    • per user cash/burn reward burn (gold vs silver vs bronze)
Keeping in min success metrics and ROI, Priority for above strategies
1, 6, 3, 5,
  1. Clarify

  • Could you clarify the word “loyalty”? It means the retention rate, doesn’t it?

  • Any specific target market? => India

  1. Company & Product

  • Google Pay

    • What is it? => A digital wallet platform and online payment system

    • How does it work?

      • In store => Tap your phone to the payment device => DONE

      • In app/web => Click Buy with GPay

      • Manage:

        • Credit and debit cards

        • Ticket and boarding passes

        • Loyalty, gift cards, and more.

    • Devices supported => Android phones, tablets or watches

  • Google

    • Strength

      • Big data

      • Excellent infrastructure

      • Highly-qualified engineers

    • Weakness

      • Based in US

      • Revenues heavily rely on digital ads

  1. Strategies


Goal fit




Focus on repetitive payments (Water, electronic,…)

Increase retention rate => People have to pay repetitively.

Market size is big because everyone must do repetitive payments.

There are many existing solution from other competitors

Stable revenue, because of the repetition and size market

The amount per transaction is not much

Partner with Indian suppliers (limited numbers => be able to handle in short period of time)

House rental industry

Renting payment is repetitive action => high retention rate

Market size is big

The amount per transaction is high

A lot of partners

Spend more effort to partner and encourage house owners to accept pay by G Pay

Allowing user to pay their public fees (tax, ticket fees, …) via G pay

Retention rate is high

Big market.

Not too much competitors

High revenue.

Complicated because we have to partner with government and understand the law thoroughly

Membership program

Encourage people to come back

Not too impactful

Only target to existing users, cannot expand the market.

Increase transactions per users

Build standalone reward feature.

Adapt to all version of Android

Increase user base

Increase the customer segments

The more users we have, the more revenue we can earn

Optimize the software to adapt to all versions of the OS (graphics, hardware requirements, …)


  1. Recommendation


  • Do right now:

    • Partner with water and electric suppliers to allow people to be able to pay via G Pay.

    • Partner with house renting platforms to integrate G Pay into their platform.

  • Take into consideration

    • Meanwhile, consider the tax and other fee system to decide whether we should partner with Government to allow people to pay tax and other public fee through G Pay

    • Besides Loyalty, gift cards from the suppliers, we can build our own membership system to reward users having high retention rates.

    • We should minimize as much as possible the device requirements to make sure everyone is able to use them.


  1. Clarifying questions

  • I’m not so sure about Google Pay since I haven’t used it before. I only know it looks like the virtual wallet allowing people to pay for their bills at stores accepting Google Pay. Could you explain a little bit how it works so I can understand it more completely, thank you?

  • Can I ask whether Google Pay is available in iPhones? No

  • Do we have any specific market to target? India

  • Do you have any goal or metrics to define the definition of loyalty? => No

  • Is there any constraint? => No

  • Is there any goal? => No

  1. User groups

There are a myriad of kinds of people using Google Pay, but I think I will categorize them into 2 main groups:

    1. Store staff: He is staff of a store in which shoppers are allowed to pay their bills via Google Pay.

    2. Payer: He is a person who uses Google Pay to pay his bills instead of cash.

Which group of users do you want me to go ahead? => Payer

As I know that the gap between the rich and poor in India is very big. And the behaviors of each class are significantly different.  So I will break the payer group down into 3 different groups based on their class:

  • Upper class: 

    • High-income or huge possessions.

    • Going to luxurious places

    • Spend a large amount of money per transaction

    • Use the up-to-date smartphone

    • Market size: 20%

  • Middle class

    • Medium-income, well-educated, most of them are white-collar employees

    • Often Go to supermarkets and convenience stores to buy goods and places for the middle class, like mid-coffee shops, mid-restaurant, fast-food, food court, …

    • Spend not too much money per transaction

    • Use the cell phone with function enough to meet their demands, and don’t want to update the newest version if not necessary

    • Market size: 50%

  • Lower class

    • The income is below the standard

    • Not pay outside of essential things (like food, accomodation, …)

    • Use the low-price cell phone with the old version to meet the basic demand like calling, texting, web browsing, ….

    • Market size: 20%

  • Other

Which group of users do you want me to define the strategy for?

  • I don’t think we should focus on lower class because the money they spend is not too much

  • If we focus on the upper class, we can earn more money per transaction but the market size may be not too large

  • If we focus on the lower class, we can have more transactions but the amount of money per transaction may be not too high.

  • In my opinion, I will focus on the largest market size first (Middle class) because I believe that in the future this segment will still go up and maybe the middle and upper classes also share some behaviors, interests, and values.

  1. Use cases




Using Google Pay for monthly payment (accomodation, water and electric payment, …)


People really need a tool to help them pay these repetitive stuff every month


Retention rate of this use case is high because users have to pay them every month


It is not too hard to create the payment method to connect consumers to suppliers and perform the online transaction

Using Google Pay when online shopping


It is very inconvenient for people to use cash when shopping online, so absolutely they will need a tool to help them pay online


The retention rate is not too high. The amount of money per transaction also is not high. People tend to not buy expensive items online


The numbers of e-commerce platforms are not too much, so I think it is not too hard to connect our system with them

Using Google Pay when offline shopping


I think in developing countries, people often prefer using cash to online payment in brick and mortar stores because they think it’s unsafe to pay via online


People often don’t want to use a virtual wallet to pay for a large amount of money per transaction. The retention rate may not be stable


The numbers of brick and mortar stores are countless so it’s hard for us to connect with all of them

According to the points of use cases, I think we should go through the Using Google Pay for monthly payment use case first.


  1. Strategies

  • Make sure our system has partnered with all supplier companies, such as water and electrics.

  • Provide the simple UX for house owners and renter do the transaction

  • Simplify the process and contract to make sure users not need to put too much their efforts in these tasks

  • We can provide some special promotion for users when they use the long-term payments to reward them. (E.g: gifts, special customer services, vouchers)

  • We should offer the function to allow people to connect with suppliers for feedback about their services. And we also help users know the newest announcements from suppliers, such as schedules for electric maintenance, …

In conclusion, I think we should develop the solutions for two other use cases to help people can do all payments in one platform, which must be very convenient for them. People easily are hooked if they use the product for daily tasks.


  • What is the objective of the loyalty program? Increase sales, increase user engagement.
  • How is it used? It is used as a payment method to pay online, pay in stores, send money to other users, store loyalty/tickets & cash in rewards
  • How does google pay make money? No direct revenue right now for Google, there might be some monetization opportunities down the load
  • Do we have a budget for the program? let us assume me have limited budget

Describe the company, product, competition, etc.

Loyalty programs can be effective in increasing sales, increasing user engagement (buy more), creating brand influencers, building strong customer relationships, etc.

Google already large user base who have might have stored payment methods (in the google play store, google apps), etc. I believe these are already available in the GPay wallet as a payment method. GPay is also the standard payment wallet on the android phone. This means that the company already has large amount of users available on the platform.

Google faces strong competition from Apple Pay, Samsung Pay, and smaller partners.

There is also an increase in the adoption of contactless payment system due to the current virus.

The challenge for GPay would be to introduce a loyalty program that increases the adoption of the wallet which in turn would translate to increase transaction volume/sales. The loyalty program should be interesting to the user.

List of strategic options

  1. Build a dynamic point-based system (adjustable depending on the activity)
  2. Build a flat 1% cashback
  3. Build a flat 1% cashback and more cashback at some partners with whom Google has a relationship with
  4. Collect points to redeem on google products.
  5. Collect points to redeem on play store

Evaluation criteria

OptionsEffortChances of user repeatedly using walletIncrease sales potentialBudget impact

Build a dynamic point-based system (adjustable depending on the activity) High High High High
Build a flat 1% cashback Medium Medium Medium High
Build a flat 1% cashback and more cashback at some partners Medium Medium-High Medium High
Collect points to redeem on google products. Medium Low Low Low
Collect points to redeem on play store Medium Low Low Low



Considering that GPay is not making money currently. I would start with a limited program (options 5). We can control the points to dollars conversion during redemption time. The loyalty programs can initially be redeemed only in google play store (apps, games, watch faces etc.)

This loyalty program can be scaled up option 1 when GPay starts to make a profit. We could use option 1 to reward users X points for paying using GPay, X Points for paying regular utility bills, etc. However, this is not the right time to invest in a full-blown loyalty program so my recommendation is to start with option 5.

We can measure the list by watching the metrics – DAU (Daily active users), Revenue, Points awarded per user, Points redeemed per user.