The Parliamentary Standing Committee on Communications and Information Technology raised concerns over the market dominance of foreign-owned fintech platforms in India, including Google Pay and Walmart-backed PhonePe.
The committee showed disquietude on the concentration of UPI market share in terms of the volume of transactions processed, which the NPCI presses to cap at 30 percent.
It mentioned that these foreign-backed companies represented 83.3 percent share between the period of October-November 2023, where home-grown BHIM UPI had occupied 0.22 percent share. Google Pay had a 36.39 percent spread in UPI market share in terms of volume, while Phonepe topped with a 46.91 percent share.
The committee’s report noted foreign entities like PhonePe and Google Pay are entrenching deeper in the Indian fintech sector. It campaigned for the boost and promotion of indigenous players.
It further emphasized fintech companies are becoming a conduit for money laundering.
“In this context, the Committee recommends that there should be a focus on the promotion of local Indian players in the fintech universe. Indigenously developed BHIM UPI is a good example of it, however, its share in the UPI market is very low. As India, focusing on ‘Make in India’ in other,” the report, presented in the Parliament on February 8, added.
The report revealed that virtual cards facilitated by international fintech companies serving as virtual accounts are a medium to pulling money out of India, all thanks to VISA and MasterCard networks.
“While virtual accounts provide convenience in making fund payments and reconciliation, it has come to notice that virtual accounts are used to mask the funds trail while making payments. Virtual accounts are not monitored at present and may evade the AML/CTF mechanism,” the committee said in its report.
The committee further urged fintech firms to come forward to generate awareness around safe transaction methods and bogus tactics employed by fraudsters using their app.
“These apps/platforms or companies operating them run commercial ads to attract the attention of citizens towards the convenience of using them for financial transactions. They also contain details of bank accounts and other personal information of individual users linked to them,” it said.