India Delays Introducing Market Share Cap for UPI Payments, Providing Relief to Walmart-Backed PhonePe and Google Pay

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By Jaspreet Kalra

MUMBAI (Reuters) – India has announced a significant development in its digital payments landscape. The country has delayed the implementation of market share caps for a popular digital payments method, giving Google Pay and Walmart-backed PhonePe a two-year reprieve.

The Proposal and Its Background

In November 2020, the National Payments Corporation of India (NPCI) first proposed the market share cap as part of its efforts to promote healthy competition in the digital payments sector. The plan aimed to restrict digital payment firms from holding more than 30% share of the volume of transactions processed via India’s popular unified payments interface (UPI).

Impact on Google Pay and PhonePe

The delayed implementation of the market share cap will undoubtedly benefit Google Pay and Walmart-backed PhonePe, the two most widely used apps in India to make UPI payments. According to regulatory data, PhonePe held a significant 47.8% share of UPI payments in November 2024, while Google Pay’s share was at 37%. Together, these two firms processed an astonishing 13.1 billion transactions in the same period.

Why the Delay?

According to sources familiar with the discussions, the decision to delay the market share cap is aimed at not hindering the growth of the UPI ecosystem while also giving other players the time to grow. "The goal is to create a level playing field and give all participants an opportunity to grow," said one person involved in the discussions.

Other Players in the Market

While Google Pay and PhonePe dominate the market, other fintech companies such as Paytm, Navi, Cred, and Amazon Pay are also present. These players will likely benefit from the delayed implementation of the market share cap, which will give them more time to grow and compete with the top two players.

NPCI’s Decision

The NPCI did not immediately respond to an email seeking comment on this development. However, a separate statement by the corporation revealed that it has lifted a cap on WhatsApp Pay’s UPI product onboarding users.

Implications of the Delay

The delayed implementation of the market share cap will undoubtedly have significant implications for the digital payments sector in India. While Google Pay and PhonePe will benefit from the reprieve, other players may see this as an opportunity to grow and compete with the top two firms.

Conclusion

India’s decision to delay the implementation of market share caps for digital payments method is a significant development in the country’s digital payments landscape. The move will give Google Pay and Walmart-backed PhonePe a two-year reprieve, allowing them to maintain their dominance in the market. However, other players may see this as an opportunity to grow and compete with the top two firms.

References

National Payments Corporation of India (NPCI). (2020, November). Proposal for Market Share Cap.
Regulatory data on UPI transactions.
NPCI’s statement on lifting cap on WhatsApp Pay’s UPI product.