An Indian parliamentary committee has urged the government to support the development of domestic fintech players that can offer alternatives to Walmart-backed apps PhonePe and Google Pay, which currently hold more than 83% of the country’s fast-growing digital payments market. country.
The 58-page report, which includes a number of recommendations, comes at a time when Paytm, another leading payments company in the country, is reeling from a crackdown on its banking operations at payments banks.
The Reserve Bank of India’s directive last week asks Paytm to shut down Paytm Payments Bank, which processes most of the transactions for the financial services company. The disruption to Paytm is likely to cause the UPI payment app’s market share to fall further relative to rivals PhonePe and Google Pay, industry executives have warned.
PhonePe held 46.91% of UPI’s market share by volume during the period from October to November 2023, the parliamentary committee on communications and IT wrote in its report. Google Pay had a 36.39% market share during the same period, the report said.
Domestic BHIM UPI’s market share by volume was only 0.22%, the report said. PhonePe and Google Pay probably hold a large market share of UPI by transaction value.
The National Payments Corporation of India, a special unit of India’s central bank RBI, has previously raised similar concerns about clear monopoly in the mobile payments market in the South Asian market. It had earlier suggested putting a check on players’ market share, ensuring that no player processes more than 30% of UPI transactions in a month.
The NPCI, which oversees the UPI payment network, in late 2022 extended the deadline for the new check to the end of 2024. Google Pay and PhonePe captured less than 80% market share at the time NPCI initially proposed the check in 2020.
“As India, focusing on ‘Make in India’ in other sectors, the Commission is of the view that local entities should be promoted in the fintech sector,” the report added.
