The National Payments Corporation of India (NPCI), the governing body behind the UPI platform, is set to engage with smaller UPI players and select banks on March 5 to address the proposed 30 percent market share cap for individual apps in the digital payments ecosystem. This move comes as the NPCI seeks to foster a more diverse and inclusive system, given that major players like PhonePe, Google Pay, and Paytm currently command a collective market share of nearly 95 percent in UPI transactions.
Sources suggest that the meeting will be a forum for the exchange of ideas and proposals on how to implement market share controls without disrupting the existing payments ecosystem. The discussion is likely to involve various stakeholders, including smaller apps like BHIM (run by NPCI), various bank apps, Amazon Pay, Cred, Jupiter, Slice, and others.
While the meeting is scheduled for the evening, some participants expressed surprise at the short notice, highlighting the urgency and evolving nature of discussions around market share. Notably, concerns have been raised about the potential formation of a duopoly in the market if Paytm’s share continues to decline due to ongoing regulatory challenges faced by its banking arm.
As of now, PhonePe holds a substantial 47 percent market share, closely followed by Google Pay with 36.4 percent. In contrast, Paytm’s market share dipped to 11 percent in February amid the regulatory crisis faced by its banking arm.
The NPCI had initially set the deadline for capping the market share of a single player at 30 percent by the end of 2022 but extended it to 2024. This extension was deemed necessary to avoid disrupting user experience, prevent existing players from onboarding new customers, and avert potential transaction limitations on various platforms.
A parliamentary panel had previously raised concerns about the dominance of PhonePe and Google Pay in the UPI market, both of which are majority-owned by US companies.
