The Indian government is looking to address the growing dominance of PhonePe and Google Pay in the UPI payment market, where the two American tech giants currently control around 80 percent of the market share. Concerns have been raised about the potential emergence of a duopoly in this market, especially after the recent ban on Paytm. With over 10 billion UPI transactions taking place monthly in India, the government is keen to ensure that the market is not solely controlled by two foreign companies.
To tackle this issue, the government is considering implementing a 30 percent cap on UPI payment services. This new plan, led by the National Payment Corporation of India (NPCI), aims to prevent any single UPI payment service from dominating with more than 30 percent market share. The objective is to foster a more competitive and diverse ecosystem in the UPI landscape.
This move comes in response to a recommendation from a parliamentary panel, which called for support of domestic fintech firms and a reduction in reliance on foreign players in the UPI market. The proposal gains significance in light of the recent suspension of Paytm by the Central Bank.
The UPI system, introduced in 2016, involves around 500 banks and facilitates transactions worth over Rs 10 billion every month, serving more than 70 million merchants.
The government’s plan to cap the market share of UPI payment services is aimed at preventing the overwhelming dominance of PhonePe and Google Pay, while promoting a more competitive environment. By fostering competition, the Indian government hopes to give room for homegrown fintech companies to flourish and reduce reliance on foreign players in the UPI market.
FAQ:
1. What is the concern regarding PhonePe and Google Pay in the UPI payment market?
– The concern is about the growing dominance of PhonePe and Google Pay, which currently control around 80 percent of the market share. There are concerns about the potential emergence of a duopoly in the market.
2. What is the proposed solution to tackle this issue?
– The government is considering implementing a 30 percent cap on UPI payment services. This means that no single UPI payment service can have more than 30 percent market share.
3. Who is leading this new plan?
– The plan is led by the National Payment Corporation of India (NPCI), which is working towards fostering a more competitive and diverse ecosystem in the UPI landscape.
4. Why is the government implementing this cap?
– The government wants to prevent the overwhelming dominance of PhonePe and Google Pay in order to promote a more competitive environment. The objective is to give room for homegrown fintech companies to flourish and reduce reliance on foreign players in the UPI market.
5. What was the recommendation from a parliamentary panel?
– The parliamentary panel recommended support for domestic fintech firms and a reduction in reliance on foreign players in the UPI market.
Definitions:
– UPI: Unified Payments Interface. It is a real-time payment system developed by the National Payments Corporation of India that enables multiple bank accounts to be linked to a single mobile application.
– Duopoly: A situation in which two companies or organizations have complete control or dominance over a particular market or industry.
Suggested related links:
– National Payment Corporation of India
– PhonePe
– Google Pay
The source of the article is from the blog bitperfect.pe