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NPCI publishes UPI market share data, yet to consult players on 30% cap

PhonePe, Paytm, digital payments

The National Payments Corporation of India (NPCI) has released app-wise data for companies and banks providing Unified Payment Interface (UPI), which show that Google Pay and PhonePe had a combined market share of 82% in volume terms and 86% in value terms during the month of November 2020.

So far, the NPCI has released data on bank performance. This is the first time that the umbrella organisation for retail payments has released UPI app performance data. Last month, the NPCI said that it would introduce guidelines that place a market share cap of 30% on third-party apps on the UPI network, to “address the risks and protect the UPI ecosystem.

Transactions on the UPI platform grew by 106% YoY to ₹3.9 lakh crore in November this year, compared to a little over ₹1.89 lakh crore in the same month last year. Between April and November this year, over 10.6 billion transactions worth nearly ₹19.4 lakh crore took place on UPI.

Of the 57 bank and third-party UPI apps, Google Pay and PhonePe dominate the industry followed Paytm Payments Bank, Amazon Pay, BHIM UPI (the NPCI’s own UPI app), and a slew of bank apps.

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While Google Pay processed the highest volume of UPI transactions in November 2020, PhonePe processed the most UPI transactions in value terms in the same period.

No industry-wide discussions on market share cap

While the NPCI’s 30% market share cap on UPI players will come into force from January next year, a specific guideline on how payments companies and banks have to implement the cap is yet to be issued. Further, the NPCI is yet to consult industry players on the methodology to introduce a cap on UPI transactions.

MediaNama reached out to the heads of four leading UPI payments app and two senior payments industry executives, all of whom said that no meetings with the NPCI has taken place to discuss the UPI market share cap policy since the circular was issued on November 5. “No one knows how the policy can be implemented on the issuer side, while on the acquiring side, one can put in a control on the count of merchants on a monthly basis,” said one of the payment company heads quoted above on the condition of anonymity.

A payments industry executive said that the policy is a welcome move as it will limit the ability for the three leading players to use tactics like cashbacks to acquire consumers. “If there is a limitation on merchant acquiring by the leading UPI players, it will help the smaller UPI players grow their network. But this can come at a cost to the merchants. The right policy should ensure that no one player has a market advantage, but is free to expand as much as they can,” this person said on the condition on anonymity.

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