According to reports, a legislative panel in India, comprising members from the Indian Parliamentary Panel on Communications and Information Technology, has emphasized the necessity of fostering the expansion of indigenous FinTech companies in the country’s digital payments sector. The panel highlighted the need for support and assistance to bolster the growth of local FinTechs in light of the dominance of international players like PhonePe and Google Pay. These two giants currently hold a combined share of over 83% of the nation’s digital payments industry, as discussed in a report on Thursday, February 8.
The dominance of PhonePe and Google Pay in the Unified Payments Interface (UPI) market, where PhonePe leads with 46.91% and Google Pay follows with 36.39%, was a major topic of discussion. In contrast, local players like BHIM UPI have a significantly lower market share, standing at 0.22%. The parliamentary committee’s report sheds light on the challenges faced by these local FinTechs in competing with established global players.
The Reserve Bank of India (RBI) initiated the UPI system in 2016 to facilitate real-time payments across bank accounts, aiming to enhance financial inclusion and efficiency. However, concerns have been raised by the National Payments Corporation of India (NPCI), which regulates UPI payments, regarding the duopoly in the mobile payments industry. NPCI has expressed worries about the implications of such dominance on market competition and innovation.
To address these concerns, the NPCI had previously proposed a market share cap to ensure that no single participant controls more than 30% of UPI transactions in a given month. However, this proposition has been extended until the end of 2024, indicating ongoing deliberations and efforts to level the playing field for local FinTechs. The Indian Parliamentary Panel’s discussions underscore the importance of providing assistance and support to indigenous FinTech companies to nurture a more competitive and diverse digital payments ecosystem in India.
