The parliamentary standing committee on communications and information technology has advised the government to support local apps due to the significant market share of foreign-owned fintech apps in the Unified Payments Interface (UPI), including Google Pay and PhonePe, both owned by Walmart.

The National Payments Corporation of India (NPCI) has taken up the topic of UPI market share concentration and has proposed capping UPI volume share for apps at 30 percent starting in 2019.

“The committee notes that fintech companies, apps and platforms such as PhonePe and Google Pay owned by foreign entities dominate the Indian fintech sector,” the house panel said in a report tabled in Parliament.

The UPI market share was 36.39 percent for Google Pay and 46.91 for PhonePe in terms of transaction volume in October-November 2023, it said.

“In this context, the committee recommends that there should be focus on promotion of local Indian players in the fintech universe. Indigenously developed BHIM UPI is a good example of it, however its share in the UPI market is very low,” it said.

Report also stated that the committee believes that indigenous companies should be supported in the fintech industry, given India's emphasis on "Made in India."

Two companies, Walmart-owned PhonePe and Alphabet-backed Google Pay, have historically dominated the whole ecosystem of the nation's thriving UPI sector.

In 2023, these two entities accounted for almost 80 percent of all transactions handled by the payment network.

Between the two, PhonePe often represents close to 50 percent of all UPI transactions that are recorded each month.

Industry experts predict that as the RBI tightens its regulatory screws on Paytm, a distant third player in the sector, the market will continue to swing further in favor of these two giants.

Days after reports that government authorities were discussing curbing the market share of UPI apps at 30 percent first appeared, the panel report was released. Regulating Paytm Payments put the proposal back in the center bank's crosshairs, even though it was supposedly on the RBI's post-election agenda.