PhonePe, a Walmart-controlled payments firm, has taken a significant lead in the Unified Payments Interface (UPI) transaction market, capturing over 50% of the market share by value and volume as of August, according to data from the National Payments Corporation of India (NPCI).
The NPCI reported that UPI registered 14.96 billion transactions worth Rs 20,60,735.57 crore in August, with PhonePe recording 7.23 billion transactions amounting to Rs 10,33,264.34 crore. This translates to a market share of 48.36% by volume and 50.14% by value.
Google Pay, another leading player, recorded 5.59 billion transactions totaling Rs 7,42,223.07 crore, holding a market share of 37.3% by volume and 36% by value. Paytm, which processed transactions worth Rs 1,13,672.16 crore, captured a market share of 7.21% by volume and 5.51% by value.
PhonePe’s market share has increased compared to previous months, while Google Pay’s growth has slowed down. Emerging players such as CRED, Navi, and Fampay are also gaining traction, with CRED processing 147 million transactions, Navi handling 88 million transactions, and Fampay processing 57 million transactions.
The NPCI has also announced an increase in the upper limit for UPI transactions to Rs 5 lakh for specific types of payments, including tax payments, payments to hospitals and educational institutions, and investments in IPOs and RBI retail direct schemes.
Market Concentration and Challenges for New Players
The high market concentration among the top three players, including two foreign-owned companies, raises concerns about the platform’s ability to support new players and the credit card segment, which is ceding ground to UPI.
“For the fiscal year ending in March 2024 (FY24), NPCI’s revenue from operations spiked to Rs 2,876 crore from Rs 2,065 crore in FY23 while its profit surged to Rs 1,134 crore from Rs 828 crore during the same period,” according to the NPCI.
However, the smaller players and fintechs are seeking more viable use cases in the UPI payments ecosystem, and the market dynamics may not support significant monetization, especially with foreign-owned companies dominating the market.