New Delhi | Special Correspondent: The India FinTech Foundation (IFF) has expressed serious concerns over the growing dominance of just two firms in the UPI (Unified Payments Interface) ecosystem. According to the foundation, the networks and transaction volumes controlled by PhonePe and Google Pay have created a quasi-monopoly, posing risks to the overall balance, competition, and resilience of India’s digital payment system.
IFF has submitted a detailed report to the Ministry of Finance and the Reserve Bank of India (RBI), recommending timely regulatory intervention to ensure that new and smaller platforms have a fair opportunity to participate and thrive, thereby maintaining inclusivity and competition.
Structured Monopoly and Impact on Government Platforms
The report notes that the strong user base and registrations of the duopoly have led to declining market share for government-owned platforms like BHIM. Limited monetization opportunities and the capital gains enjoyed by existing large players create significant entry barriers for new and smaller platforms, affecting competition, pricing, and service quality in the sector.
Concentration of UPI Transactions
According to IFF, over 80% of current UPI transactions are routed through just two companies, despite the participation of nearly 30 third-party application providers (TPAPs). This situation creates challenges for smaller, domestic competitors trying to establish themselves in the market.
Proposal to Cap Transactions at 30%
IFF has recommended that the National Payments Corporation of India (NPCI) consider imposing a 30% transaction volume cap for individual firms. The move aims to restructure UPI incentive mechanisms and ensure that other TPAPs receive a fair share of incentives, especially those routed through banks owned or operated under government mandates.
PhonePe and Google Pay’s Market Dominance
Data indicates that by June 2025, approximately 86% of UPI transactions by number and value were handled by PhonePe and Google Pay alone. IFF emphasizes that this concentration requires urgent regulatory attention to safeguard competition, inclusivity, and systemic resilience in India’s UPI ecosystem.
