The regulatory body that oversees India’s popular UPI payments network is considering relaxing proposed market share caps for players like Google Pay, PhonePe and Paytm as it struggles to enforce the restrictions, two people familiar with the matter told TechCrunch.
The National Payments Corporation of India (NPCI), which reports to the Reserve Bank of India, is considering increasing the market share that UPI operators can have to 40% or more, two people familiar with the matter said, requesting anonymity due to the sensitive nature of the information. The regulator had previously proposed a market share cap of 30% to encourage competition in the sector.
UPI has become the most widely used way for people to send and receive money in India, with the mechanism processing over 12 billion transactions a month. Walmart-backed PhonePe has a market share of around 48% by volume and 50% by value, while Google Pay has a market share of 37.3% by volume.
Paytm, once a giant in the space, has seen its market share drop from 11% late last year to 7.2% today due to regulatory issues.
According to several industry executives, NPCI’s move to increase market share caps is likely to be a controversial move as several UPI providers are hoping the regulator will step in to curb the dominance of PhonePe and Google Pay.
NPCI, which has so far refused to comment on the market share issue, did not respond to a request for comment on Tuesday.
The regulator originally planned to implement the market share cap in January 2021, but postponed the deadline to January 1, 2025. The regulator struggled to find a workable way to implement the market share cap proposal.
The stakes are particularly high for PhonePe, India’s most valuable fintech startup, which is valued at $12 billion.
PhonePe co-founder and CEO Sameer Nigam said last month that the startup could not go public “if there is uncertainty on the regulatory front.”
“If you buy a stock at Rs 100 and you price it assuming a market share of 48-49%, there is uncertainty as to whether and when it will come down to 30%,” Nigam said at a fintech conference last month. “We are asking (regulators) to find other ways to address our concerns or tell us what their list of concerns is,” he added.
