In an effort to devise a plan of action to counter the increasing market dominance of PhonePe and Google Pay within the UPI ecosystem, the National Payments Corporation of India (NPCI), the regulatory body in charge of the nation’s extensively used Unified Payments Interface (UPI) mobile payment system, is scheduled to meet with a number of fintech startups this month.

According to persons familiar with the situation who spoke with TechCrunch, NPCI executives are scheduled to meet with representatives from CRED, Flipkart, Amazon, and Fampay, among other firms, to discuss their major initiatives targeted at expanding UPI transactions on their respective applications and to understand the support they require.

With over 10 billion transactions processed each month, UPI—which was developed by a consortium of Indian banks—has emerged as the most widely used online payment method in India.

The recent gatherings are a part of an stepping up efforts to address concerns expressed by legislators and industry participants over Google Pay and PhonePe’s concentrated market position. These two services now account for nearly 86% of UPI transactions by volume, up from 82.5% at the end of December. More than three-quarters of PhonePe are owned by Walmart.

Following a crackdown by the Reserve Bank of India (RBI), Paytm, the third-largest UPI participant, saw its market share drop to 9.1% at the end of March from 13% at the end of 2023.

According to a person with knowledge of the situation, the central bank spoke with the NPCI in order to voice its “displeasure” with the increasing duopoly in the payments industry. A representative for the NPCI declined to comment.

A parliamentary commission in India recommended in February that the government encourage the development of indigenous fintech companies that can provide substitutes for the Google Pay and PhonePe apps, which are sponsored by Walmart.

For a considerable amount of time, the NPCI has been in favour of capping the market share of individual businesses involved in the UPI ecosystem at 30%. It has, however, delayed until the end of December 2024 the time for businesses to comply with this requirement. Enforcing this guideline is a special challenge for the organisation. It feels that there isn’t a technical mechanism in place right now to do that. TechCrunch had already stated.

According to a second source familiar with the situation, the RBI is also considering an incentive scheme to level the playing field and make it more attractive for new UPI participants. The NPCI is pushing fintech businesses to provide incentives to their users in order to encourage the usage of their individual applications for UPI transactions, according to a second story published by the Indian daily Economic Times on Wednesday.

A parliamentary commission in India recommended in February that the government encourage the development of indigenous fintech companies that can provide substitutes for the Google Pay and PhonePe apps, which are sponsored by Walmart.

For a considerable amount of time, the NPCI has been in favour of capping the market share of individual businesses involved in the UPI ecosystem at 30%. It has, however, delayed until the end of December 2024 the time for businesses to comply with this requirement. As TechCrunch previously reported, the organisation feels it does not yet have the technical means to enforce this rule, which presents a unique difficulty.

The new sessions are a part of a larger initiative to address legislators’ and industry participants’ worries over Google Pay and PhonePe’s concentrated market dominance, which combined now account for about 86% of UPI transactions by volume, up from 82.5% at the end of December. More than three-quarters of PhonePe are owned by Walmart.

Following a crackdown by the Reserve Bank of India, Paytm, the third-largest UPI participant, had its market share drop to 9.1% by the end of March from 13% at the end of 2023.

According to persons familiar with the situation who spoke with TechCrunch, NPCI executives are scheduled to meet with representatives from CRED, Flipkart, Amazon, and Fampay, among other firms, to discuss their major initiatives targeted at expanding UPI transactions on their respective applications and to understand the support they require.

With over 10 billion transactions processed each month, UPI—which was developed by a consortium of Indian banks—has emerged as the most widely used online payment method in India.

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