India’s National Payments Corporation (NPCI) is taking steps to address the growing dominance of PhonePe and Google Pay in the country’s Unified Payments Interface (UPI) ecosystem. NPCI executives are set to meet with various fintech startups, including CRED, Flipkart, Fampay, and Amazon, to discuss strategies for increasing UPI transactions on their platforms.
UPI, which was developed by a coalition of Indian banks, has become the most popular method for online transactions in India, processing over 10 billion transactions every month. However, concerns have been raised about the market share concentration of Google Pay and PhonePe, which together account for 86% of UPI transactions by volume.
The Reserve Bank of India (RBI) has also expressed its dissatisfaction with the growing duopoly in the payments space. In response to these concerns, the NPCI has advocated for limiting the market share of individual companies participating in the UPI ecosystem to 30%. However, enforcing this directive has proven challenging for the NPCI due to a lack of technical mechanisms.
To support the growth of domestic fintech players and promote competition, a parliamentary panel in India has urged the government to offer alternatives to PhonePe and Google Pay. The RBI is also considering an incentive plan to create a more favorable competitive field for emerging UPI players.
In addition to these efforts, the NPCI is encouraging fintech companies to offer incentives to their users, encouraging them to make UPI transactions on their platforms. This move aims to promote competition and provide users with more choices.
The discussions between NPCI executives and fintech startups highlight the industry’s recognition of the need for a more diverse and competitive UPI ecosystem. By engaging with smaller players and understanding their initiatives and requirements, the NPCI can work towards creating a level playing field for all participants.
With Paytm’s market share declining due to regulatory measures by the RBI, it is crucial for the NPCI to address the concentration of power in the hands of a few companies. By promoting competition and supporting emerging players, the NPCI can foster innovation and ensure that the UPI ecosystem continues to evolve and benefit Indian consumers.
In conclusion, the efforts by the NPCI to engage with fintech startups and address the dominance of PhonePe and Google Pay in the UPI ecosystem demonstrate a commitment to promoting competition and providing users with more choices. By working towards limiting market share concentration and exploring incentive plans, the NPCI aims to create a more diverse and competitive payments landscape in India.