The governing body that oversees India’s popular UPI payments system is considering relaxing its proposed market share cap for operators like Google Pay, PhonePe and Paytm as it struggles to enforce restrictions, two people familiar with the matter told TechCrunch.
The National Payments Corporation of India (NPCI), which reports to India’s central bank, is considering increasing the market share that UPI operators are allowed to hold to more than 40%, said the two people, who asked not to be identified due to the sensitive nature of the information. The regulator had previously proposed a 30% market share cap to encourage competition in the space.
UPI has become the most widely used method of sending and receiving money in India, processing over 12 billion transactions a month. Walmart-backed PhonePe commands a market share of around 48% by volume and 50% by value, while Google Pay has a 37.3% share by volume.
Paytm, once a heavyweight in the space, has seen its market share fall to 7.2% from 11% at the end of last year amid regulatory challenges.
The NPCI’s increase in market share limits is likely to be a controversial move, as many UPI providers were hoping that the regulator would step in to curb the dominance of PhonePe and Google Pay, according to several industry executives.
The National Investment Authority, which has so far declined to comment on the market share issue, did not respond to a request for comment on Tuesday.
The regulator had initially planned to impose market share limits in January 2021, but has pushed back the deadline to January 1, 2025. The regulator has struggled to find a feasible way to enforce its proposed market share limits.
The stakes are high, especially for PhonePe, India’s most valuable fintech company, with a valuation of $12 billion.
PhonePe co-founder and CEO Sameer Nigam said last month that the startup cannot go public “if there is uncertainty on the regulatory side.”
“If you buy a stock at Rs 100 and price it on the assumption that we have a market share of 48-49%, there is uncertainty as to whether and when it will come down to 30%,” Nigam told a fintech conference last month. “We are asking them (the regulator) if they can find another way to at least resolve any concerns they have or give us a list of concerns.”