An Indian parliamentary panel has recently released a report highlighting the dominance of PhonePe and Google Pay in India’s fast-growing digital payments market. The report emphasizes the need to support the growth of domestic fintech players to provide alternatives to these leading payment apps, which currently corner more than 83% of the market.
Key Takeaway
An Indian parliamentary panel has raised concerns over the dominance of PhonePe and Google Pay in India’s digital payments market, urging the government to support the growth of domestic fintech players and promote a more competitive landscape in the industry.
Concerns and Recommendations
The 58-page report includes a series of recommendations urging the government to take action to address the overwhelming market share of PhonePe and Google Pay. It comes at a time when Paytm, another major player in the country’s payments industry, is facing challenges following a directive from the Reserve Bank of India to cease operations of its payments bank business.
The report highlights that PhonePe commanded 46.91% of the UPI market share by volume, while Google Pay held 36.39% during a specific period. In contrast, the market share by volume of indigenous BHIM UPI was only 0.22%. The report also suggests that PhonePe and Google Pay likely possess a significant market share of UPI by transaction value.
Regulatory Concerns
The National Payments Corporation of India (NPCI), a unit of the Indian central bank RBI, has previously expressed similar concerns about the duopoly in the mobile payments market. It had proposed enforcing a check on the market share for players, ensuring that no single player processes more than 30% of the UPI transactions in a month. The NPCI had extended the deadline for the new check to the end of 2024, emphasizing the need for a more competitive landscape in the market.
Promotion of Local Entities
The report also emphasizes the importance of promoting local entities in the fintech sector, aligning with the ‘Make in India’ initiative. It underscores the need to support the growth of domestic fintech players to foster a more diverse and competitive payments ecosystem in the country.
