Indian Parliament flags dominance of foreign UPI apps like Google Pay and PhonePe

The Indian Parliamentary Panel has expressed concerns about the growing dominance of foreign UPI apps like Google Pay and PhonePe. Both apps are used widely by Indians for UPI transactions, which isn’t good news for the local apps. Owing to this, the Parliament is pushing the usage of local apps such as the BHIM UPI.

Google Pay, PhonePe dominance is concerning for NPCI

Back in 2020, the National Payments Corporation of India (NPCI), which regulates the Unified Payments Interface (UPI) stated that a single payments app should not have more than 30 percent market share.

“The committee notes that fintech companies, apps and platforms such as PhonePe and Google Pay owned by foreign entities dominate the Indian fintech sector,” said the Parliamentary Panel in a report tabled in Parliament Thursday.

Google Pay and PhonePe are continuing to grow in the market. PhonePe, for the unversed, has backing from Walmart and it is the majority stakeholder in the company.

As per NPCI, PhonePe and Google Pay had a total UPI market share of almost 83 percent between October-November2023. The former was at the lead with around 46 percent market share, Google Pay coming second with around 36 percent market share.

“The UPI market share was 36.39% for Google Pay and 46.91 for PhonePe in terms of transaction volume in October-November 2023.”

Paytm Payments Bank had a market share of 13 percent, followed by others having a 5 percent UPI market share. The indigenously developed app, BHIM UPI’s market share stood at only 0.22 percent.

Having said that, the local apps are recommended to be promoted.

“The committee recommends that there should be focus on 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.”

The recent RBI ban on Paytm Payments Bank has worried over 47 million merchants across the country. It’s enough to show how little dominance can also shake up the market.

Taking this as an opportunity, the rival platform BHIM UPI announced a cashback offer to lure new customers. The offer provides up to Rs 750 cashback when doing transactions through a credit card.

Apart from this, the BHIM app also provides a slew of features similar to other payments apps like Paytm, PhonePe, and Google Pay. This includes bank-to-bank payments, Scan & Pay, and more.