NPCI talks with Fintechs to diversify UPI ecosystem | Fusion - WeRIndia

The National Payments Corporation of India (NPCI) is set to engage with various fintech startups in April.

It aims to address the dominance of PhonePe and Google Pay in the Unified Payments Interface (UPI) payments system.

These two platforms currently account for almost 86% of UPI transactions by volume, prompting concerns over market share concentration.

In response to the burgeoning duopoly, NPCI’s outreach is part of a broader effort to encourage a more competitive environment within India’s digital payment landscape. The focus is on diversifying the ecosystem by promoting other players in the market.

This move comes amidst the Reserve Bank of India’s (RBI) expressed concerns about the limited competition in the payments sector, highlighting the need for more balanced market dynamics.

As a strategic measure, NPCI plans to meet with representatives from fintech firms like CRED, Flipkart, Fampay, Amazon etc.

The discussions will centre on exploring initiatives that could increase UPI transactions through their platforms.

Moreover, these interactions aim to provide NPCI with insights into the support and innovations necessary for these companies to expand their footprint in the UPI ecosystem.

Additionally, NPCI has proposed a cap on the market share for any single company within the UPI framework, setting a limit of 30%.

This policy is intended to be fully implemented by the end of December 2024, although technical challenges have delayed enforcement.

Meanwhile, the RBI is considering proposals to foster a more favourable competitive landscape for emerging UPI players.

Encouragingly, the NPCI is also advising fintech companies to introduce user incentives to drive more transactions through their applications.

UPI, originally developed by Indian banks, has not only revolutionized online payments in India but also gained international traction.

The system now processes over 10 billion transactions monthly and is recognized in multiple countries. These include Singapore, Malaysia, Sri Lanka, Nepal, Mauritius, the UAE, France, and the UK.

This strategic engagement by NPCI could potentially reshape the future of digital payments in India. Besides, it also ensures a fair and competitive market that benefits consumers and innovators alike.

Image Credit: NPCI, CC BY-SA 4.0, via Wikimedia Commons

Source: http://www.npci.org.in/Brand-centre.asp

Image Reference: https://commons.wikimedia.org/wiki/File:NPCI-Logo.png