India Unable To Impose Caps on Mobile Payments Market Share, Four Years On 9
Eight years ago, a coalition of retail banks in India built a mobile payments system called the UPI. The system is interoperable, allowing users to make instant peer-to-peer transactions between them -- across all participating banks -- and to merchants at zero cost. Today, it processes more than 12 billion transactions each month -- more than all card payments combined in India -- and has become the most popular way Indians transact online. Many U.S. giants have cited UPI as an example that other countries should also explore developing. We have also covered UPI several times over the years.
NPCI, a quasi-regulator founded by India's central bank, oversees UPI. Four years ago, it announced plans to enforce a market share cap on each participating player. The quasi-regulator didn't want few players to become too powerful and any single participant to process more than 30% of all UPI transactions in a month. It later postponed the deadline to January 1, 2025. Walmart-owned PhonePe and Google Pay command more than 86% of the UPI market. Now, the NPCI is reportedly planning to extend the deadline again by up to two years. The reason? TechCrunch reports: The NPCI had initially planned to enforce the market share cap in January 2021, but postponed the deadline to January 1, 2025. TechCrunch had previously reported that the regulator was moving towards extending the deadline further after concluding that there is no practical solution to address the issue. One can argue that the NPCI shouldn't be interfering with free market forces and let people decide which apps they wish to use. TechCrunch adds: However, several UPI providers admit that an incentive plan that unfairly differentiates [one of the proposed solutions by some industry players] against PhonePe and Google Pay will be a bad look for the ecosystem and could send wrong signals to the investor community. U.S.-based investors, including Accel, Lightspeed, Tiger Global, Insight Partners, Invesco, Vanguard, BlackRock and Fidelity, are among some of the most prolific investors in Indian public firms and startups. Some of the choices made by the RBI [India's central bank] and other regulators have already spooked many investors.
NPCI, a quasi-regulator founded by India's central bank, oversees UPI. Four years ago, it announced plans to enforce a market share cap on each participating player. The quasi-regulator didn't want few players to become too powerful and any single participant to process more than 30% of all UPI transactions in a month. It later postponed the deadline to January 1, 2025. Walmart-owned PhonePe and Google Pay command more than 86% of the UPI market. Now, the NPCI is reportedly planning to extend the deadline again by up to two years. The reason? TechCrunch reports: The NPCI had initially planned to enforce the market share cap in January 2021, but postponed the deadline to January 1, 2025. TechCrunch had previously reported that the regulator was moving towards extending the deadline further after concluding that there is no practical solution to address the issue. One can argue that the NPCI shouldn't be interfering with free market forces and let people decide which apps they wish to use. TechCrunch adds: However, several UPI providers admit that an incentive plan that unfairly differentiates [one of the proposed solutions by some industry players] against PhonePe and Google Pay will be a bad look for the ecosystem and could send wrong signals to the investor community. U.S.-based investors, including Accel, Lightspeed, Tiger Global, Insight Partners, Invesco, Vanguard, BlackRock and Fidelity, are among some of the most prolific investors in Indian public firms and startups. Some of the choices made by the RBI [India's central bank] and other regulators have already spooked many investors.
The Actual Market Share Numbers (Score:5, Informative)
####### 35%: Google Pay
### 13%: Paytm
# 5%: Others
Was that so hard?
https://www.statista.com/stati... [statista.com]
How can you enforce this? (Score:2)
How do you enforce a cap on apps market share? Isn't it the users who decide which service provider to use?
Re: (Score:2)
How do you enforce a cap on apps market share? Isn't it the users who decide which service provider to use?
Quotas!
I can picture it now...
A customer attempts to pay at a shop, but is rejected because the quota for their payment type has been exceeded, so they try another... and another.
Shops will have to keep a whiteboard of working payment types. Customer satisfaction will be YUGE! Nothing better than turning away customers because you can't take their payment.
#winning
Re: (Score:2)
Sadly, I can see a system like that actually being used in China. India, less likely, but not entirely impossible.
Re: (Score:2)
Limited in their ability (Score:3)
Obviously, one doesn't want a monopoly/duopoly developing like MasterCard/VISA but how does one prevent it? Unfortunately, one has to analyze the ecosystem with the question "why is PhonePe preferred?" Is it pre-installed, is it preferred by vendors (for some economic reason), is it easier to create an account, are there already economies of scale (disadvantageous to small providers)?
While regulatory agencies are created to ensure a consistent product/service, they are limited in their ability to prevent crony capitalism or its increasing control of the marketplace. If one of the above questions is relevant, there is little government can change to correct the problem.
Disable new user signups (Score:1)