The National Payments Corporation of India (NPCI), the governing body that oversees the country’s widely used Unified Payments Interface (UPI) mobile payment system, is set to partner with various fintech startups this month to develop a strategy to address the growing of PhonePe market dominance and Google Pay in the UPI ecosystem.
NPCI officials plan to meet representatives of CRED, Flipkart, Fampay and Amazon among other players to discuss their key initiatives aimed at boosting UPI transactions on their respective apps and understand the help they need, people told TechCrunch who know the subject.
Created by a consortium of Indian banks, UPI has become the most popular way Indians transact online, processing over 10 billion transactions monthly.
The new meetings are part of a growing effort to address concerns raised by lawmakers and industry players over the concentration of market share by Google Pay and PhonePe, which together account for nearly 86% of UPI transactions by volume, from 82, 5% at the end of December. Walmart owns more than three-quarters of PhonePe.
Paytm, the third-largest UPI player, has seen its market share decline to 9.1% by the end of March, from 13% at the end of 2023, following a crackdown by the Reserve Bank of India (RBI).
An overview of India’s UPI ecosystem. (Image: Macquarie)
The conversation follows the central bank expressing “dismay” at the NPCI over the growing duopoly in the payments space, a person familiar with the matter said. A spokesman for NPCI declined to comment.
In February, a parliamentary committee in India urged the government to support the development of domestic fintech operators that can offer alternatives to the Walmart-backed PhonePe and Google Pay apps.
NPCI has long advocated capping the market share of individual companies participating in the UPI ecosystem at 30%. However, it has extended the deadline for companies to comply with this directive until the end of December 2024. The agency faces a unique challenge in enforcing this directive: It believes it does not currently have the technical mechanism to do so, the agency previously said. TechCrunch.
The RBI is also mulling an incentive plan to create a more favorable competitive field for emerging UPI players, another person familiar with the matter said. Indian daily Economic Times separately mentionted On Wednesday, NPCI encouraged fintech companies to offer incentives to their users by promoting the use of their respective apps for making UPI transactions.
