New Delhi, The National Payments Corporation of India (NPCI) is gearing up to implement significant measures to curb the expanding market share of PhonePe and Google Pay in UPI transactions. NPCI is reportedly set to conduct a meeting with other fintech companies this month to strategize ways to increase their share in UPI transactions. The meeting will be attended by several companies, as per NPCI sources.
With UPI transactions exceeding 10 billion rupees every month, NPCI is concerned about the rising dominance of these two companies in the online payment system, fearing that they might establish a monopoly. NPCI has advocated limiting the stake of companies to 30 percent, with a deadline set for December 2024. Currently, these two companies command about 85 percent of the total transactions through UPI. Additionally, the market share of Paytm has decreased after the action taken by RBI.
NPCI has granted permission to Paytm’s parent company, One97 Communications, to start migrating users to a new payment service provider, Bank Hadal. Paytm was given permission by NPCI to operate as a third-party application provider on UPI. This development comes more than a month after the permission was granted. Four banks, namely SBI, Axis Bank, HDFC Bank, and Yes Bank, will act as bank handles for Paytm. UPI users with the @PaytmUPI handle can now create new accounts with the partner bank.
RBI has also expressed displeasure over the increasing monopoly in the online payment system. To address this concern, the Reserve Bank is considering a plan to create a more favorable competitive environment for emerging UPI companies.
Officials will meet representatives of Cred, Flipkart, Amazon, and other fintech companies to discuss initiatives aimed at promoting UPI transactions on their platforms. NPCI wants people to adopt these new apps to reduce the risks arising from excessive transactions on PhonePe and Google Pay. These new UPI apps have been certified by NPCI to ensure that customers can avail the benefits of discounts at a new level.
