News & Analysis

Existing UPI Players Aiming to Restrict New Ones?

The govt had set a deadline for limiting market share to 30% but now existing companies are seeking more time

Trust the large corporations to first commit to non-monopolism and then shift their stance once the business gets underway. The National Payments Corporation of India (NPCI) had set a deadline for January 2023 to limit market share of UPI players but now existing players in the digital payments business are asking for more time. 

The NCPI has therefore initiated conversations with the government as well as industry stakeholders on the implications of delaying the implementation deadline, according to published media reports. A report published in the Economic Times said existing players want the deadline extended by three to five years for limiting market share. 


What brought this concern?

The immediate concern stems from two quarters – the first relates to requests from PhonePe and Google Play seeking an extension of the deadline from January next to three years from that point in time. And the second is the reported move by food delivery apps Swiggy and Zomato to join UPI, the digital payments platform, as third-party payment apps. 

What we are not sure about at this point is whether the NPCI is concerned about the new entrants joining the UPI fray or what appears to be an effort by existing ones to block such entries, by seeking more time to consolidate their own efforts to enhance their market share in the lucrative business of digital transactions. 

Well, one cannot blame players like Google Pay and PhonePe. Latest data from NPCI said the digital transactions in August stood at a whopping 6.5 billion. Things are likely to move north over the next few months as India goes whole hog on shifting from 4G to 5G networks, even as the 4G infrastructure is also being upgraded by players like Vodafone Idea and BSNL. 


It’s not just UPI, but also ONDC

There is also the question of how Swiggy and Zomato design their strategies on the UPI front. Unlike PhonePe, Google Pay and WhatsApp Pay, these companies have sought approvals to offer UPI services as third-party apps. Which automatically suggests that they want to get on board the government’s digital commerce network that is garnering quite some eyeballs. 

Currently, the digital commerce network under the Open Network for Digital Platforms (ONDC) has only Paytm functioning as a buyer app that facilitates monetary transactions. PhonePe is also readying its launch on the ONDC network as is Google Pay. Now, if Swiggy and Zomato get the nod, these delivery apps can get on board too. 

Small wonder then that the existing players want more time, because this isn’t about just being on UPI, but getting on board ONDC, which the government is pitching as a game changer in the entire eCommerce ecosystem – possibly the first of its kind in the world. These food delivery apps would perceive their existing line of business getting a leg up once they integrate payments into the mix, given that they already have delivery sewn up. 


What’s next though?

These food and grocery delivery companies are already in talks with banks to create the payment gateway as a third-party service on their apps. Meanwhile, the fact remains that new entrants into the UPI system do take long to get traction with users. WhatsApp Pay has less than 1% share in the UPI market with 6.7 million transactions. This despite launching cashback campaigns in April and June that saw marginal spikes. 

On the other hand, existing players Google Pay and PhonePe claim 80% share on the network while NCPI had set a limit of 30% market share for any digital payments entity. As of now, the government and NCPI are considering the ramifications of such a delay with the Reserve Bank of India also expected to share its opinion on the matter. 

Leave a Response