India’s Payment Duopoly Under Siege
The stakes are high in India’s fast-growing instant payments network, where a duopoly dominated by Walmart-owned PhonePe and Google Pay has raised concerns among smaller players. Amazon and Meta are among the big companies set to lobby India’s payments body over the dominance of these two players, which combined accounted for roughly 80% of the 22.6 billion transactions on the Unified Payments Interface (UPI) network in March. This has intensified concerns among players with smaller shares about their ability to compete, highlighting the need for regulatory intervention to level the playing field.
The meeting between executives representing platforms including Amazon Pay, WhatsApp, CRED, MobiKwik, and Flipkart’s Super.money and the National Payments Corporation of India (NPCI) comes over a year after India deferred plans to cap the market share of UPI apps at 30% until December 31, 2026. This delay has effectively allowed PhonePe and Google Pay to retain their dominant positions, making it harder for smaller rivals to compete. The NPCI operates the UPI network, which processes billions of transactions each month, and has struggled to find ways to curb dominance without disrupting services used by hundreds of millions of users.
The dominance of PhonePe and Google Pay is not just a numbers game; it has real-world implications for the Indian economy. With PhonePe having crossed 700 million registered users and 50 million merchants across India, its scale far outpaces rivals such as Paytm, Flipkart’s Super.money, CRED, Amazon Pay, and MobiKwik. The merchants that accept PhonePe span more than 98% of the country’s postal codes, highlighting the reach that smaller rivals say is difficult to replicate. This concentration of market power has raised concerns about user acquisition practices, product design, and monetization within the UPI ecosystem.
The Unspoken Logic of India’s Payment Duopoly
While the NPCI has struggled to find ways to curb dominance without disrupting services, the underlying logic of India’s payment duopoly is clear: the bigger you are, the harder it is to compete. PhonePe and Google Pay have used their scale to onboard users, use contact data, and offer features such as autopay and payment mandates, making it harder for smaller rivals to compete. The proposals put forward by Amazon, Meta, and other smaller players, including restrictions on how dominant apps onboard users and use contact data, calls for fair access to features such as autopay and payment mandates, and requests for incentives and regulatory support to help emerging players compete, are a testament to the challenges they face.
However, the decision-making logic behind the NPCI’s inaction is less clear. While the NPCI operates under the Reserve Bank of India’s supervision, its inability to address market concentration has raised questions about its effectiveness as a regulator. The NPCI’s struggles to find ways to curb dominance without disrupting services used by hundreds of millions of users have created a power vacuum that has allowed PhonePe and Google Pay to consolidate their positions.
The NPCI’s inaction has also created uncertainty in the market, with questions persisting over how it could address market concentration. The meeting between executives representing smaller players and the NPCI may lead to some immediate changes, but the underlying issues will take time to resolve. The NPCI’s struggles to regulate the UPI ecosystem have created a challenge for the Indian government, which has to balance the need to promote competition with the need to ensure the stability of the financial system.
Winners and Losers in India’s Payment Wars
The dominance of PhonePe and Google Pay has created winners and losers in India’s payment wars. The biggest losers are the smaller players, such as Paytm, Flipkart’s Super.money, CRED, Amazon Pay, and MobiKwik, which have struggled to compete with the scale and reach of the two dominant players. The biggest winners are PhonePe and Google Pay, which have used their scale to onboard users, use contact data, and offer features such as autopay and payment mandates.
However, the dominance of PhonePe and Google Pay has also created new opportunities for other players. For example, the rise of PhonePe and Google Pay has created new opportunities for fintech startups, which are using the UPI network to offer new services and products. The NPCI’s struggles to regulate the UPI ecosystem have also created new opportunities for other regulators, such as the Reserve Bank of India, which is taking a more active role in regulating the financial system.
The dominance of PhonePe and Google Pay has also disrupted the supply chain, with smaller players struggling to compete with the scale and reach of the two dominant players. The concentration of market power has raised concerns about user acquisition practices, product design, and monetization within the UPI ecosystem, highlighting the need for regulatory intervention to level the playing field.
The Skeptical Case Against Regulation
While the NPCI’s struggles to regulate the UPI ecosystem have created a challenge for the Indian government, some argue that regulation is not the answer. They argue that the market is best left to itself, with the dominant players using their scale to innovate and offer new services and products. However, this argument ignores the fact that the dominance of PhonePe and Google Pay has created a power imbalance in the market, with smaller players struggling to compete.
The skeptical case against regulation also ignores the fact that the NPCI has a duty to regulate the UPI ecosystem, ensuring that it is fair, transparent, and competitive. The NPCI’s struggles to regulate the UPI ecosystem have created a challenge for the Indian government, which has to balance the need to promote competition with the need to ensure the stability of the financial system. The NPCI’s inaction has created uncertainty in the market, with questions persisting over how it could address market concentration.
Next Steps in India’s Payment Wars
The meeting between executives representing smaller players and the NPCI may lead to some immediate changes, but the underlying issues will take time to resolve. The NPCI’s struggles to regulate the UPI ecosystem have created a challenge for the Indian government, which has to balance the need to promote competition with the need to ensure the stability of the financial system.
The next verifiable event to watch is the NPCI’s response to the proposals put forward by Amazon, Meta, and other smaller players. The NPCI’s response will be a key indicator of its ability to regulate the UPI ecosystem, ensuring that it is fair, transparent, and competitive. The NPCI’s response will also be a key indicator of the Indian government’s commitment to promoting competition and ensuring the stability of the financial system.
Bookmark this one — it will matter to your business decisions this week.
By Priya Nair, AI & Startup Reporter at TrendFlashy
Ready to launch your own asset?
Check out our guide on Building a Profitable Online Business.
