The National Payments Corporation of India (NPCI) is looking at ways to stabilise market share dynamics on the Unified Payments Interface (UPI), and has called a meeting of third-party application players on Tuesday to discuss this, according to multiple people in the know.
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It operates the popular digital payment channel.
“NPCI has called top executives of all major payment apps,” said one person. “While there is no fixed agenda we know of, we were told conversations will be around finding ways to push UPI apps (other than market leaders) to increase their market share.”
Last month’s regulatory crackdown on Paytm Payments Bank could see the number three player ceding user volume to the frontrunners, further tilting the market in their favour. Walmart-backed PhonePe and Google Pay already control more than 80% of the UPI market between them, while Paytm has under 12%. Fintech platform Cred is a distant fourth on the leaderboard.
A senior industry executive said the top two could benefit, in which case “market dynamics could get skewed even further, which will be a major concern in terms of concentration risks.”
NPCI did not respond to an email seeking comment.
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The retail payments body has been trying to impose a 30% cap by volume in the UPI market for third-party payment applications. While it had initially decided on implementation from January 1, 2023, the move was postponed to December 31, 2024.
Players like PhonePe and Google Pay, which have grown exponentially over the years, stand to lose incremental business when NPCI implements the market share diktat.
The Reserve Bank of India is also concerned. In a release on February 23, the banking regulator said it asked NPCI to support the movement of UPI transactions from Paytm Payments Bank to other lenders to “minimise concentration risk in the UPI system.”
Over the last few years, multiple companies have hopped on to the UPI bandwagon, but overall, the market dynamics have not changed. Ecommerce company Flipkart joined the UPI ecosystem on Sunday, in partnership with Axis Bank. Fintech firms Cred, Groww, Jupiter, Samsung Pay and Amazon Pay operate on UPI, but have a negligible market share.
In fact, Paytm has already seen its share in the UPI market go down over the last few months. In August 2023, it had 12.8%, which came down to 11.8% in January this year.
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In January, PhonePe processed 5.7 billion transactions, followed by Google Pay at 4.4 billion. In comparison, Amazon, one of the largest ecommerce players in India, processed 59 million transactions. Cred processed just over 100 million transactions, while Groww, the largest wealth management app in India, processed less than 9.5 million transactions.
