The data for digital payments through the Unified Payments Interface (UPI) network for October 2020 has confirmed the dominance of Google Pay and PhonePe over India’s digital payments market.
Google Pay accounted for 857.81 Mn transactions, while Flipkart-owned PhonePe ranked second with 839.88 Mn transactions. Together, both apps captured 81% of the market share in terms of the total volume of transactions. Further, Google Pay and PhonePe collectively have 86% market share in terms of the total value of transactions.
In October, the UPI payments network had achieved a milestone of recording 2.07 Bn monthly transactions, its highest tally for a single month since the payments network came into existence in 2016. The October numbers also marked a 100% year-on-year (YoY) growth from October 2019.
The data cited above is for the period before WhatsApp Pay was rolled out in India. However, the Facebook-owned messaging platform seems to have barely made a dent in the market, registering only 70,000 transactions worth INR 9.32 Cr in November.
Last month, the National Payments Corporation of India (NPCI) — which developed and operates the UPI network — allowed WhatsApp Pay to launch its services in India in a graded manner. For the first phase of its launch, WhatsApp, which has 400 Mn monthly active users (MAUs) in India, has been allowed to roll out services to only 20 Mn users, to prevent an overload of the UPI payments infrastructure.
It is worth noting that WhatsApp Pay had been facing regulatory hurdles due to concerns raised by both NPCI and the Reserve Bank of India (RBI) since 2018. During this time, the company had been beta testing its product.
Among the other players in the UPI market, Paytm accounted for 11% of the market share with 244.94 Mn transactions, while Amazon Pay recorded 46.59 Mn transactions.
Last month, NPCI had imposed a 30% cap on the market share for each of the third-party payment apps (TPAPs), in terms of the total volume of UPI transactions. According to the notification, the existing TPAPs will get two years, starting in January 2021, to comply with the new norms in a phased manner.
However, for the new entrants in the digital payments landscape, notable among them being WhatsApp Pay, the 30% cap will be applicable from January 2021.
NPCI had announced that the 30% cap will help address the risks emanating from an overload of the UPI payments infrastructure. However, several experts and stakeholders also saw the move as NPCI’s attempt at ensuring that India’s digital payments market allows the entry of new players and isn’t monopolised by the few big players who are currently dominating the market.