The National Payments Corporation of India (NPCI), the governing body that oversees the country’s widely used Unified Payments Interface (UPI) mobile payments system, will engage with several fintech startups this month to develop a strategy that address PhonePe’s growing market dominance. and Google Pay in the UPI ecosystem.
NPCI executives plan to meet representatives from CRED, Flipkart, Fampay and Amazon, among other players, to discuss their key initiatives aimed at boosting UPI transactions on their respective apps and understand the support they need, people familiar with told TechCrunch. The issue.
UPI, created by a coalition of Indian banks, has become the most popular way to transact online among Indians, processing more than 10 billion transactions monthly.
The new meetings are part of a growing effort to address concerns raised by lawmakers and industry players regarding the market share concentration of Google Pay and PhonePe, which together account for nearly 86% of Google transactions. UPI by volume, up from 82.5% at the end of December. Walmart owns more than three-quarters of PhonePe.
Paytm, the third-largest UPI player, saw its market share fall to 9.1% at the end of March, down from 13% at the end of 2023, following a crackdown by the Reserve Bank of India (RBI).
An overview of India’s UPI ecosystem. (Image: Macquarie)
The conversation comes after the central bank expressed “displeasure” to NPCI over the growing duopoly in the payments space, a person familiar with the matter said. An NPCI spokesman declined to comment.
In February, an Indian parliamentary panel urged the government to support the growth of domestic fintech players which may offer alternatives to the Walmart-backed PhonePe and Google Pay apps.
The NPCI has long advocated capping the market share of individual companies participating in the UPI ecosystem at 30%. However, it has extended the deadline companies to comply with this directive until the end of December 2024. The organization faces a unique challenge in enforcing this directive: it believes that currently lacks a technical mechanism to do soTechCrunch previously reported.
The RBI is also weighing an incentive plan to create a more favorable competitive field for emerging UPI players, another person familiar with the matter said. The Indian newspaper Economic Times separately reported The NPCI on Wednesday is encouraging fintech companies to offer incentives to their users, promoting the use of their respective apps for UPI transactions.