India Delays Market Share Limits for Digital Payments, Boosting Competition in UPI Ecosystem

The recent decision by Indian authorities marks a significant shift in the country's digital payments landscape. By postponing the implementation of market share restrictions for a leading payment system, this move paves the way for major players in the market to continue their growth without immediate limitations.

On Tuesday, Indian officials announced a two-year delay regarding the enforcement of market share limits for the widely adopted digital payments method, the Unified Payments Interface (UPI). This change is set to favor prominent contenders like Google Pay and PhonePe, which is backed by Walmart.

The original proposal, introduced back in November 2020, aimed to prevent any digital payment provider from exceeding a 30 percent share of the total transaction volume processed through UPI. Initially scheduled to be implemented by the close of 2024, the new deadline is now moved to December 2026, as stated by the National Payments Corporation of India (NPCI), which acts as a regulatory authority.

Among the most utilized applications for UPI transactions in India, PhonePe and Google Pay currently dominate the market. Additional entities in the financial technology sector include Paytm, Navi, Cred, and Amazon Pay, among others.

As of November 2024, PhonePe accounted for 47.8 percent of UPI transactions, while Google Pay held a 37 percent share, according to available regulatory statistics. Together, these two applications facilitated an impressive 13.1 billion transactions during that month.

An insider involved in the talks stated that the decision to postpone the market share limits intends to facilitate the continued growth of the UPI framework, allowing other competitors adequate time to enhance their market presence. The individual spoke on the state of being unnamed because of limitations on media engagement.

In addition to the market share cap delay, the NPCI has also lifted a restriction previously imposed on WhatsApp Pay regarding onboarding new UPI users, as revealed in a different announcement on Tuesday.