Smaller Unified Payments Interface (UPI) apps adjured National Payments Corporation of India (NPCI), an organization operating retail payments and settlement systems, to map out a mechanism to support and incentivize them in the face of the challenge that emerged due to the dominance of PhonePe and Google Pay in the digital payments ecosystem.
NPCI is an initiative by the Reserve Bank of India and Indian Bank(s) Association that operates a mobile payments platform, UPI, which facilitates a staggering 12 billion transactions in a month, or almost 80 percent of all digital payments.
In an 80-minute virtual meeting convened by the NPCI on March 5, the smaller UPI players put forth facing a deficit in their marketing budget, limiting them from offering cashback and rewards to customers in pursuit of winning customers from the top three apps.
Amazon Pay, Slice, Jupiter, Navi Technologies, Bajaj Pay, and Tata Nue, among others, were present at the meeting. However, PhonePe, Google Pay, and Paytm, which remarkably hold a larger market share, were kept out of the virtual meeting that discussed the growing dominance of a few players.
Notably, there are apprehensions of Paytm losing out on its market share because of the recent controversy it battered in. Its customers may shift to Phonepe and GooglePay, circumscribing duopoly by these two giants.
“Everyone wants to take market share from the top three, but no one has any clear idea on how to. The players who entered later could not attract customers even with cashback. Since there were around 50 participants, not everyone was willing to discuss their future strategies openly,” reported Moneycontrol, quoting a participant representing a private sector bank.
NPCI is contemplating holding monthly meetings till December or beyond, in an attempt to create a level playing field for UPI players. The top three players in this domain have set foot in almost 95 percent of the market in terms of total transaction volume and value.
Most smaller players wanted NPCI to grant them a window for implementing new features that would add to their expenditure budgets for UPI. They implored NPCI for better incentive schemes and branding from NPCI. However, the organization urged the apps to offer more cashback to consumers.
A few market players complained that merchant apps and websites at the payment gateway generally display PhonePe, Google Pay, and Paytm and put the rest under a single heading as other UPI apps. NPCI representative replied that this is the prerogative of the merchants in that NPCI hardly can do anything.
Recently, a parliamentary panel raised concerns over the increasing dominance of PhonePe and Google Pay in the UPI market.