RBI Mulls Addressing Monopoly of PhonePe, Google Pay in UPI Space; Deputy Guv Explains

Reserve Bank of India deputy governor T Rabi Sankar on Wednesday said that the central bank was going to find a solution to the problem of payments done on the United Payments Interface (UPI) getting concentrated on two big players — Google Pay and PhonePe. Most users in India use PhonePe or Google Pay to carry out UPI transactions.


“About 80 percent of transcations in UPI are concentrated in two entities. The United States is addressing the issue (of the market dominance by big tech platforms) now. We are also looking at Europe to see how we can address this issue,” said T Rabi Sankar,  deputy governor of the Reserve Bank of India (RBI), while speaking at the US India Business Council.

In March 2021, the National Payments Corporation of India, or NPCI, had mandated a cap on the signing up of new users by UPI platforms with over 30 per cent market share. “Upon breach of threshold(s), basis request by third-party app provider (TPAP) through their PSP (partner) banks, there will be a provision to exempt the players to some extent when the volume cap is reached. Such exemption may last maximum up to 6 months unless specifically further extended,” NPCI had said at the time.

However, that move has not been implemented yet.


At the moment, PhonePe leads the chart of the monthly UPI transactions done across the country, with 46 per cent of the total transactions being done on the platform. Google Pay comes next with a share of 38 per cent, while Paytm Payments Bank has a share of just 17 per cent.

Sankar further said that it would be good if different countries can standardise their API protocols.” We would need to avoid fragmentation of API, data standards. We have seen what fragmentation of tax standards have done across the world,” he added.

On cross border payments, Sankar said that they are stuck in the past. “Cross border payments are still stuck in the last century in terms of costs. It needs a lot of scope for improvement. And I think the CBDC (central bank digital currencies) are the most efficient answer to this,” he said.

“Fraud management is an area that we also need to focus on if we have to scale it up (digital payment),” he noted. Citing the example of the Unified Payments Interface (UPI) for non-feature phones, Sankar said the RBI pays special attention to the fact that digital payment technology should be inclusive.

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