The National Payments Corporation of India (NPCI) plans to postpone the deadline for enforcing a 30% market share limit on firms handling payments via the Unified Payment Interface (UPI) by one to two years, according to sources familiar with the matter who told reuters. This move is anticipated to favor Google Pay and PhonePe, backed by Walmart, as they currently hold significant dominance in the UPI payments sector.
India’s leading digital payment system, UPI, manages more than 11 billion transactions monthly. PhonePe commands a market share of 48.3%, closely trailed by Google Pay at 37.4%. Conversely, regulatory hurdles have caused Paytm’s share to decline to 8%. Initially slated for implementation in January 2021, NPCI postponed the market share cap deadline to January 1, 2025. Sources suggest that a final decision regarding the extension will be announced closer to the revised deadline.
The proposed extension of the deadline is likely to draw criticism from other stakeholders in the ecosystem who have been urging NPCI to adhere to its commitments. Some companies have put forward suggestions, including incentives favoring smaller players. NPCI and the Reserve Bank of India (RBI) encounter obstacles in introducing additional incentives for UPI service providers. Unlike credit card issuers such as Mastercard and Visa, which impose fees on merchants for consumer transactions, UPI operates essentially cost-free for merchants.
NPCI had anticipated that Meta’s WhatsApp, which also facilitates UPI payments, would help disrupt the duopoly. However, as of April this year, the app had only captured a 0.2% market share.
Sources indicate that the RBI convened a meeting on Wednesday with key stakeholders in the UPI ecosystem to deliberate on strategies for scaling UPI infrastructure, diversifying the product portfolio, addressing challenges, and exploring solutions. An NPCI spokesperson declined to comment on queries regarding market share, and sources suggest that the regulator may revise its plan by the year’s end.