An Indian parliamentary panel has voiced its concerns over the prevailing dominance of PhonePe and Google Pay in the country’s UPI payments market, especially amid ongoing issues with Paytm.
What Happened: A TechCrunch report on Friday revealed that the parliamentary panel has called upon the government to promote the growth of domestic fintech players. This comes at a time when PhonePe and Google Pay hold sway over a staggering 83% of India’s rapidly expanding digital payments market.
The panel’s recommendations are part of a 58-page report, published amidst Paytm’s ongoing struggle with a clampdown on its payments bank business. The Reserve Bank of India’s directive last week virtually directed Paytm to cease the operations of Paytm Payments Bank, which manages most transactions for the financial services firm.
The report also disclosed that PhonePe controlled 46.91 per cent of the UPI market share by volume, while Google Pay held 36.39 per cent during October-November 2023. In stark contrast, the market share by volume of homegrown BHIM UPI was a paltry 0.22 per cent.
The National Payments Corporation of India (NPCI), an arm of the RBI, had previously suggested a market share cap for players, ensuring that no single player processes more than 30 per cent of the UPI transactions in a month. The deadline for this new cap has been pushed to the end of 2024.
Why It Matters: The dominance of PhonePe and Google Pay in the UPI payments market is significant in the context of recent developments in the digital payments landscape. In January 2024, Flipkart, India’s largest e-commerce platform, hinted at launching a new UPI-based payment solution. This move is seen as a strategic step to enhance user engagement and transaction frequency.
In the same month, Google Pay announced a collaboration with NPCI to take UPI to an international level. This partnership aims to simplify international payments for Indian travellers and establish UPI-like digital payment frameworks in other countries.
(The article is published under a mutual content partnership arrangement between The Free Press Journal and Benzinga)
