In a recent discussion on the Indian economy in the Lok Sabha, Nationalist Congress Party (NCP) Member of Parliament (MP) Supriya Sule expressed apprehensions about the dominance of foreign-owned fintech apps, labeling PhonePe and Google Pay as "two ticking bombs."
Sule highlighted the widespread usage of Google Pay and PhonePe compared to the lesser-known BHIM app, questioning the government's stance on promoting digital and cashless transactions. She also raised concerns over the developments at Paytm Payments Bank, likening them to potential money laundering activities.
Parliamentary Standing Committee Report
The remarks come shortly after the Parliamentary Standing Committee on Communications and Information Technology flagged the dominance of PhonePe and Google Pay in the digital payments sector. These two platforms accounted for over 82% of total UPI transactions in 2023, with PhonePe leading in transaction volumes.
Market Share Cap Proposal
Sule's statements have reignited discussions within the government regarding capping the market share of UPI apps. Reports suggest that authorities are considering imposing a 30% ceiling on the market share of UPI apps, with recent events at Paytm Payments Bank prompting renewed attention to the proposal.
Notably, the National Payments Corporation of India (NPCI) proposed a 30% market cap limit for third-party app providers (TPAPs) in late 2020. Despite deferrals, the implementation deadline for these norms is currently set for December 2024.
The concerns raised by Sule echo sentiments previously expressed by top officials at the Reserve Bank of India (RBI). Deputy Governor T Rabi Sankar had voiced apprehensions about the duopoly of PhonePe and Google Pay in the UPI space, signaling the central bank's intent to address this issue.
Sule's remarks underscore the ongoing debate surrounding the dominance of foreign-owned fintech platforms in India's digital payments landscape. As regulatory discussions continue, the government faces the challenge of balancing innovation and market competition while ensuring the security and integrity of the financial ecosystem.