According to a credible source, the National Payments Corporation of India (NPCI) will engage with fintech companies in April to counter PhonePe and Google Pay's rising market domination in the Unified Payments Interface (UPI) ecosystem.

The NPCI is reaching out due to worries over the market share concentration of Google Pay and PhonePe, which together account for nearly 86% of UPI transactions by volume.

PhonePe has struck multiple agreements to boost UPI payments in Nepal, Singapore, and the UAE. Earlier this year, Google Pay and NPCI announced a deal to expand UPI for international payments.

Paytm, the third-largest UPI provider, has seen its market share drop this year, owing in part to regulatory efforts taken by the Reserve Bank of India (RBI).

The RBI allegedly expressed "displeasure" to the NPCI about the developing payments duopoly.

A parliamentary committee has asked the government to encourage the creation of homegrown fintech companies to provide alternatives to PhonePe and Google Pay.

To address these issues, NPCI leaders will meet with representatives from CRED, Flipkart, Fampay, Amazon, and other fintech companies to explore measures for increasing UPI transactions on their platforms. The gathering is also anticipated to help the NPCI better understand the assistance these businesses require to grow.

The NPCI has proposed for a 30% market share cap on individual enterprises in the UPI ecosystem, with a deadline of the end of December 2024. However, enforcement remains difficult due to technological constraints.

Separately, the RBI is mulling a measure to improve the competitive field for new UPI players. The NPCI encourages fintech companies to provide users with incentives to promote UPI transactions through their apps.

UPI, established by Indian banks, has become one of the most popular online payment mechanisms in the country, processing over 10 billion transactions per month. It has also gained popularity abroad, with nations like as Singapore, Malaysia, the United Arab Emirates, France, Nepal, the United Kingdom, Mauritius, and Sri Lanka accepting payments in this format.