New Delhi:
India will again delay market share limits for a popular digital payment method, two sources told Reuters. This will benefit Google Pay and Walmart-backed PhonePe as authorities prioritize growth over concerns about market concentration.
The National Payments Corporation of India (NPCI), the quasi-regulator, will extend the year-end deadline by as much as two years to limit the market share of any company that processes payments through the Unified Payment Interface (UPI) up to 30%. The sources with direct knowledge of the matter told Reuters.
PhonePe's share of UPI payments has risen to 48.3% from 37% in April 2020, while Google Pay's share has fallen to 37.4% from 44%, according to NPCI data. The two together processed 11.5 billion transactions in April, the data showed.
NPCI and Google Pay declined to comment. PhonePe did not respond to an email seeking comment.
India launched UPI in 2016 but banned companies from charging for the instant digital payment service in a bid to promote online transactions and reduce the use of cash in Asia's third-largest economy.
Unable to charge for it, Indian banks and others such as Meta-owned WhatsApp and Amazon Pay have not aggressively pushed UPI-based payments, raising authorities' concerns about a concentration risk.
While their apps don't monetize the payments, PhonePe and Google Pay have been able to leverage their UPI customer base to sell services like loans and insurance.
NPCI, which has a supervisory mandate from the central bank, announced the 30% cap in 2020 but later extended the deadline by two years to the end of 2024.
The deadline will have to be extended again, one of the sources said, as it is not possible for PhonePe and Google Pay to reduce their market share without hurting the growth of UPI payments.
A final decision on the extension will be communicated closer to the deadline, said the sources, who asked not to be identified because they are not allowed to speak to the media.
NPCI had hoped for more competition when WhatsApp was allowed to offer UPI-based payments in February 2020, but the company had just 0.2% market share in April.
India's Paytm, with the third-highest share, has experienced a drop in the number of payments processed through its platforms after regulators clamped down on a group entity.
Payment companies want the cap on their market share lifted and are asking NPCI to let them charge UPI payments to encourage competition, an official at a payments company said.
The government will decide whether to allow companies to charge UPI payments, the two sources said, but one said NPCI is not in favor of doing away with the share limit.
The volume of UPI transactions rose 49.5% in April from a year earlier, lower than the 54% increase in March.
The central bank met with industry executives on Tuesday to brainstorm ways to expand UPI's user base, which had about 300 million users and 50 million merchants at the end of last year, according to the latest data.
(Except for the headline, this story has not been edited by DailyExpertNews staff and is published from a syndicated feed.)