BENGALURU: Google Pay, the market leader on payments platform Unified Payments Interface (UPI) with typically over 40% monthly market share, has hit back at National Payments Corporation of India (NPCI) for its policy to cap market share at 30%. Google’s payments unit said the regulatory change is a ‘surprising move’ which will have its implications on ‘hundreds of millions of users who use UPI for their daily payments and could impact the further adoption of UPI and the end goal of financial inclusion.’
Google Pay’s comments come after NPCI, which manages UPI, announced Thursday it will allow a third-party app on UPI to have a maximum of 30% volume share, right before it allowed WhatsApp to go live with 20 million users. While Google Pay and PhonePe would get two years to comply, it has clearly hurt Google. According to sources, currently it is unlikely that the regulation will be changed or modified.
“Digital payments in India is still in its infancy and any interventions at this point should be made with a view to accelerate consumer choice and innovation. A choice based and open model is key to drive this momentum,” Google Pay added in its statement. Walmart-owned PhonePe has also previously said it does not like the idea of limiting market share on UPI. Late Friday night, its co-founder and CEO Smaeer Nigam said PhonePe’s customers and merchants have ‘absolutely no risk of any UPI transactions failing on its platform.’ “In fact NPCI’s circular categorically says that the 30% market share cap does not apply to existing third-party apps like PhonePe until Jan 2023. PhonePe remains fully committed to ensuring that there is no customer disruption caused by this circular,” he added.
Meanwhile, sources said NPCI is also considering making market share data public in light of the regulatory changes. While it still hasn’t decided a timeline but new rules being effective from next year for new players like WhatsApp Pay could accelerate this change. While NPCI has noted the market cap would help it to address the risks and protect the UPI ecosystem, platforms like Google Pay and PhonePe have spent significant capital to take UPI to masses and get users to transact. For example, Google Pay reportedly spent Rs 1,028 crore to incentivise users in the form of cashback rewards in the financial year ending March 2019.
On Friday, after securing the regulatory nod, Facebook CEO Mark Zuckerberg said in a post that the combination of WhatsApp and UPI’s unique architecture, in the long run, can help local organisations address some of the key challenges ‘including increasing rural participation in the digital economy and delivering financial services to those who have never had access before.’ His post said WhatsApp will work with five banks — ICICI Bank, HDFC Bank, Axis Bank, the State Bank of India, and Jio Payments Bank–for UPI payments. “Just like every feature in WhatsApp, payments is designed with a strong set of security and privacy principles, including entering a personal UPI PIN for each payment,” he added.