The dilemma of mobile payments in India | TechCrunch
India’s payments regulator is scheduled to decide early Monday whether to do so Reducing the dominance of Walmart and Google’s PhonePe in the country’s fast-growing mobile payment market, a move that could reshape how its population of more than a billion people moves money.
The decision centers around UPI, or Unified Payments Interface, a network backed by more than 50 retail banks that has changed the way Indians pay for everything from groceries to taxi rides. The platform processes more than 13 billion transactions per month, making it one of the largest digital payment networks in the world. It is also, by far, the most popular way for Indians to transact online.
The dispute is over whether the National Payments Corporation of India, which reports to India’s central bank, will impose a rule restricting companies Handle no more than 30% of all UPI transactions.
The rule first Proposed in 2020will particularly impact Walmart-owned PhonePe, which handles 47.8% of all UPI payments, and Google Pay, which processes 37.1%.
The uncertainty has hampered PhonePe’s plans to go public. startup, With a value of $12 billion Backed by Walmart, it will be one of the most prominent technology IPOs in India. Sameer Nigam, co-founder and CEO of PhonePe, said in August that the startup could not go public “if there is uncertainty on the regulatory side.”
“If you buy a stock at Rs 100 and price it assuming we have a 48-49% market share, there is uncertainty as to whether and when it will go down to 30%,” Nigam (pictured above) said. Fintech conference. “We ask them [the regulator]If they can find another way to solve their concerns at least or tell us the list of concerns.
This issue also affects the growth potential of many fintech startups trying to make deeper inroads into digital payments. If the regulator imposes limits on PhonePe and Google Pay’s ability to onboard new users or checks the number of transactions they process, many other startups stand to gain.
The regulator is inclined to delay enforcing the cap again or may increase the limit to more than 40%, people familiar with the situation told TechCrunch. The agency has already pushed back the deadline several times, from January 2021 to 2023, and then to 2025, as it struggles to implement. It held talks with several stakeholders as recently as last week regarding the decision.
Some people said that imposing market share restrictions would affect the consumer experience.
This situation highlights India’s efforts to balance technological innovation and market competition. UPI has been the cornerstone of Prime Minister Narendra Modi’s endeavors to digitize the Indian economy and reduce its dependence on cash. The system allows instant transfers between bank accounts using simple identifiers such as phone numbers, making it easier than traditional banking services.
Setting a market share cap would represent one of India’s most important interventions in the technology sector, which has attracted huge investments from global companies such as Walmart, Google, and Meta. These companies view India, with its young and increasingly digital population, as a critical market for growth.
