Top three apps continue to dominate UPI trade, despite plans to curb their share
Third party application providers (TPAPs) have sought incentives in the form of leeway or discounts from the National Payments Corporation of India (NPCI) to help boost their share of UPI volumes.
The request has been made keeping in mind that the Reserve Bank of India (RBI) and NPCI have been looking at ways to cap UPI transaction volumes on each payments platform so as to avoid over-reliance on any one single platform.
The incentives sought are in the form of either some leeway and discounts in the intercharge paid by these platforms, or some sort of mandate to route certain transactions through certain platfomrs, industry participants said.
“Smaller platforms have approached NPCI and there have been discussions, but no definite action has been taken so far,” a source told businessline. They added that while the intention was to bring down reliance on certain platforms, NPCI is still trying to figure out ways to do that without disrupting the UPI transactions ecosystem.
NPCI, had in November 2020, mandated that the volume of UPI transactions initiated through a payments service provider (PSP) should not exceed 30 per cent of the overall UPI transactions during the preceding three months.
In view of the significant potential of digital payments and the need for multi-fold penetration from its current state, it is imperative that other existing and new players (banks and non-banks) scale-up their consumer outreach for the growth of UPI and achieve overall market equilibrium, it had then said. However, implementation was later delayed by two years till December 2024.
Following this, RBI Deputy Governor T Rabi Sankar had, in December 2022, said that implementing the volume cap at this stage could have caused some friction in the UPI network, adding that competition takes time to evolve.
Market share
However, per latest NPCI data, PhonePe accounted for 46 per cent of UPI transaction volumes in October 2023, Google Pay for 36 per cent, and Paytm another 13 per cent. In comparison, as of October 2022, PhonePe had a market share of 47 per cent, Google Pay of 34 per cent and Paytm of around 15 per cent.
In terms of value of transactions, PhonePe had a market share of 48 per cent, Google Pay of 34 per cent and Paytm of 11 per cent as of October 2023.
Collectively, PhonePe, Google Pay, and Paytm accounted for 94 per cent of UPI transactions by volume and 96 per cent by value in March 2023, per the Centre for Advanced Financial Research and Learning (CAFRAL)’s India Finance Report for FY23.