The regulatory authority responsible for managing India's Unified Payments Interface (UPI) mobile payments system is planning to collaborate with fintech startups to formulate a strategy aimed at tackling the increasing market control held by companies like PhonePe and Google Pay within the UPI ecosystem.
According to a report, the National Payments Corporation of India (NPCI) intends to convene discussions with executives from various companies such as CRED, Flipkart, Fampay, and Amazon to explore crucial initiatives aimed at enhancing UPI transactions within their respective applications.
The NPCI is reportedly looking to understand the assistance companies require to further their market shares in a country where digital online payments are dominated by key players, including Google and PhonePe, that together account for nearly 86% of the UPI transactions by volume. Paytm the third largest UPI player has declined to 9.1% by the end of March, down from 13% at the end of 2023, following clampdown by the Reserve Bank of India (RBI).
Lawmakers and industry stakeholders have reportedly raised concerns about the growing dominance of two major players in the market share. The NPCI has advocated for capping the market share of individual companies in the UPI ecosystem at 30%. Nonetheless, the deadline for companies to adhere to this directive has been extended to December 2024.
Meanwhile, the NPCI is reportedly exploring avenues to support emerging fintech firms in providing incentives to their users, encouraging the utilization of their apps for UPI transactions, as per a report. Additionally, the RBI is considering an incentive scheme to foster a more conducive competitive environment for emerging UPI players in India.
In February of this year, a parliamentary panel in India called upon the government to bolster the expansion of indigenous fintech entities as a measure to curb the influence of PhonePe, backed by Walmart, and Google's payment applications in the nation.