India unsure how to reduce PhonePe and Google’s dominance in payments


India faces a dilemma in implementing long-delayed rules to curb the dominance of PhonePe and Google Pay over the country’s ubiquitous UPI payments network, which processes more than 10 billion transactions a month.

The National Payments Corporation of India (NPCI), a special unit of the central bank, wants to cap the market share of any player at 30% in the Unified Payments Interface ecosystem. With Paytm, third player in the UPI ranking, fight for survivalThe NPCI faces an urgent and unique challenge: getting PhonePe and Google Pay to reduce their market share: it doesn’t know how to do it.

NPCI officials believe there are technical obstacles to achieving this goal and have solicited ideas from industry players in recent quarters, two sources familiar with the matter said. The NPCI, which the application of the rules has been postponed until 2024declined to comment Tuesday.

Its dilemma came back into focus after a parliamentary panel last week asked New Delhi to help domestic fintech companies countering the dominance of PhonePe and Google Pay. This came after the central bank ordered Paytm, the third player, to stop several operations at Paytm Payments Bank, the associated entity that processes transactions for the financial services group.

Brokerage firm Macquarie Tuesday significantly reduced its 12-month price target on Paytm due to fears that its lending partners as well as its customers could leave the platform. Macquarie, whose price target implies a valuation of $2.1 billion for Paytm (taking into account that Paytm has a cash balance of $1 billion), said the Noida-based company “fighting for survival”.

A further loss of market share for Paytm would benefit the two largest, sector executives have warned. Citing official data, the parliamentary panel said PhonePe had 47% and Google Pay 36% market share between October and November 2023.

Industry executives said the only way for PhonePe and Google Pay to meet the 30% cap was to stop adding new users. In the meantime, PhonePe continues to spend on marketing to gain more market share.


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