PhonePe, GPay get 2 years more to cut UPI mkt share

PhonePe, GPay get 2 years more to cut UPI mkt share 

NPCI Lifts 10Cr User Cap On WhatsApp Pay 

Mayur.Shetty@timesofindia.com 01.01.2025

Mumbai : NPCI has extended by two years the deadline for third-party apps PhonePe and Google Pay to bring down their market share in UPI. The apex payments body has also lifted the onboarding limit, capping the maximum number of users at 10 crore for WhatsApp in respect of UPI. This is the second time NPCI has extended the timeline, even as PhonePe and Google Pay increased their market shares to 48% and 37%, respectively, despite the entry of new players. In Nov 2020, NPCI had announced that no single thirdparty app provider should have a market share of more than 30% of total UPI transaction volumes by Dec 31, 2024. The cap was introduced following the moratorium on Yes Bank, which impacted PhonePe transactions and led to UPI volumes dropping nearly 40% overnight. The cap aimed to reduce the risk of single-point failure. Since then, PhonePe has partnered with multiple banks to process UPI transactions. 

However, PhonePe and Google Pay’s shares con tinued to rise as the third-largest player, Paytm, faced challenges due to RBI action on Paytm Payments Bank. As of Dec 30, there were 1,613 crore UPI transactions worth Rs 22.3 lakh crore for the month. “We welcome the extension of the market cap as we believe that people will choose from dozens of new UPI apps available. Paytm is regaining market share, and new apps like Naavi, Cred, Bhim, WhatsApp Pay, and others are growing strongly. Banks are also getting their UPI app strategy in place. I believe that in the next two years, the market will resolve this market cap issue on its own. Blocking growth of incumbents is not the right strategy and would have surely slowed UPI’s growth,” said Vishwas Patel, chairman, Payment Council of India (PCI). 

Although there are a number of players, they have failed to make a significant impact in the market, as they were unwilling to spend to acquire transactions where there was little or no revenue. Google Pay and PhonePe, owned by Alphabet and Walmart, respectively, have invested billions of dollars to gain users on their platforms. NPCI’s Bhim app, launched by the prime minister during demonetisation, lost most of its initial momentum after the company shifted its strategy. 

The app was offered as a white-label service to banks that lacked their own UPI app. Recently, however, Bhim has been spun off as a separate division, and NPCI plans to push the product more aggressively. Industry insiders believe UPI is on track to achieve a billion transactions per day. “Given such volumes and the low operating cost structure, players would be able to make money even if a small charge on large merchants is imposed,” said an executive at a payment company.