India Stumped on How To Cut Google and Walmart-backed PhonePe Dominance in Payments (techcrunch.com) 20
An anonymous reader shares a report: India is facing a quandary in enforcing long-delayed rules to curb the dominance of PhonePe and Google Pay in the country's ubiquitous UPI payments network, which processes over 10 billion transactions monthly. The National Payments Corporation of India (NPCI), a special unit of the Indian central bank, wants to limit the market share of individual companies in the popular Unified Payments Interface (UPI) system to 30%, a long-delayed effort to curb the dominance of Walmart-backed PhonePe and Alphabet's Google Pay, which together control over 83% of the growing payments market.
However, with rival Paytm now struggling after strict regulatory action, the NPCI faces an acute challenge in bringing down the commanding share of the leading duopoly: It doesn't know how to. The NPCI officials believe there is a technical barrier to achieving the goal and have sought industry players in recent quarters for ideas, two sources familiar with the situation said. The NPCI, which delayed enforcing the rules to 2024, declined to comment Tuesday.
However, with rival Paytm now struggling after strict regulatory action, the NPCI faces an acute challenge in bringing down the commanding share of the leading duopoly: It doesn't know how to. The NPCI officials believe there is a technical barrier to achieving the goal and have sought industry players in recent quarters for ideas, two sources familiar with the situation said. The NPCI, which delayed enforcing the rules to 2024, declined to comment Tuesday.
Stop trying to control the freemarket (Score:2)
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Dammit! Who dug Milton Freedman out of his grave again?
Re:Stop trying to control the freemarket (Score:5, Interesting)
The problem is that payments have a network effect that causes lock-in. Merchants accept the methods consumers use. Consumers use the methods merchants accept. That makes it almost impossible for a new entrant to break in.
Example: The rent-seeking MC/Visa duopoly in America.
Of course, India's effort to fix the problem will likely make it worse. There are few countries with a more dysfunctional bureaucracy.
Re:Stop trying to control the freemarket (Score:4, Interesting)
The problem is that payments have a network effect that causes lock-in.
According to the info I can find on it, that isn't the case. The recipient is registered in the system, and any client can submit to that recipient. My opinion is that it's just humans being human. Once something appears at the top, we're more likely to use that option unless there is a quantifiable reason not to.
Re: Stop trying to control the freemarket (Score:1)
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The problem is that payments have a network effect that causes lock-in.
One fix for this kind of problem is to require that the network operators make their networks available for use by third-party providers for a fee.
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The problem is that payments have a network effect that causes lock-in. Merchants accept the methods consumers use. Consumers use the methods merchants accept. That makes it almost impossible for a new entrant to break in.
Example: The rent-seeking MC/Visa duopoly in America.
Of course, India's effort to fix the problem will likely make it worse. There are few countries with a more dysfunctional bureaucracy.
The way to fix this, either in the US or India is to create a framework where money can be exchanged electronically at zero cost to the end user. EFT (EFTPOS), Faster Payments (BACS/CHAPS), most developed nations have a bank to bank fund transfer system that is free to use for the end user. The government does little beyond mandating the system, the system is managed by the banks and by an independent entity if the banks prove themselves not up to the task. The cost of running this system is often so slight
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Competition and innovation are the natural state of things... It's the rules and regulations that prevent it. Reduce the barrier to entry, invest in companies and allow the freemarket to decice whom the numerous winners will be.
The winners in a laissez faire market will be the share holders of the winning monopoly. Do you honestly think a payment system can be unregulated?
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I agree. Then regulate it. What sort of regulations do you propose?
Re: Stop trying to control the freemarket (Score:2)
Caps on fees charged to merchants would be a great start.
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And once there is only one single possible way of paying for stuff, they will start increasing the fees for doing so higher and higher. What are the customers gonna do; just not buy food?
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The payment s likely have no fees, just like in Thailand.
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That is delightfully naïve.
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It is a fact.
I use Thai QR code payments dozens time of a day, and receive plenty enough in a month.
It is cost free by law. For both parties. And I bet: in India it is the same.
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The market hasn't been free in a long time.
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Make a better system and run it at cost (Score:3)
It will create jobs and it will attract users, what more could you want?
Offer the basic service as a public service, and let private companies compete on the basis of additional functionality.
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It will create jobs and it will attract users, what more could you want?
Offer the basic service as a public service, and let private companies compete on the basis of additional functionality.
The problem with that is, people only need the basics. In countries where we have a basic, free to use, bank to bank funds transfer system, the likes of Venmo just don't exist. Apple/Google pay are just wrappers for a credit card so they've not really taken off either. At the very best you've some banks that put a wrapper around the Faster Payments system (UK) with their own I.E. send this code to get someone to send payments to you (which will be instead of your 6 digit sort code and 8 digit account number
pleae explain (Score:2)
Explain me, please, like I am a 5 years old, as I can't understand after reading the article: why this is bad and why people should use something else (I am an adult, live in Europe and use Google Pay).
I see a chart where the options are PhonePe, Google Pay, Amazon Pay and "unregulated fintechs". Unregulated fintechs I won't touch even with a 10 ft. pole, this leaves Amazon with a minority of users.