India’s current UPI Payments market is dominated by PhonePe and Google Pay while the homegrown BHIM App has a market share of a paltry 0.22 percent. This has raised concerns as expressed by an Indian parliamentary panel and sparked by Paytm’s failure to comply with the RBI mandates.
Walmart-backed PhonePe is the current market leader in the UPI payments infrastructure in India at 46.91 percent with Google Pay taking over the second position at 36.39 percent. Both fintech giants are foreign companies. PayTM is also China’s SoftBank-backed payments processing company that was recently asked by RBI to cease payments processing operations at its PayTM Payments Bank following non-compliance with regulations. It will cease to process any payments post-February 29th leaving 47 million plus merchants with Paytm QR codes at large.
In comparison, the Indian grown BHIM UPI app has a market share of 0.22% which begs the question: are we dependent on international companies to support our UPI payments?
According to the National Payments Corporation of India (NPCI), no single company should be able to take over more than 30 percent of transactions per month. This could potentially hurt the duopoly played by PhonePe and Google Pay in India. Additionally, the parliament panel has also raised red flags concerning our dependence on foreign UPI payment apps leaving the BHIM App gasping for air.
As of now, NPCI has made its directives clear after the 30% transaction per company per month that it will run a new check by the end of this year. NPCI could take appropriate remedial actions to counter dependence on these duopoly apps. As of now, the BHIM App is offering 1 percent cashback on fuel and bill payments as well as up to 750rs instant cashback on merchant UPI payments.