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Indian Government Delays Market Share Cap on Digital Payments, Boosting PhonePe and Google Pay
NPCI Extends Deadline, Allowing Room for Dominant Players to Flourish Amidst Competition Concerns.
India's digital payments landscape sees another twist as the government decides to postpone the enforcement of caps on market share for key players, favoring giants like Google Pay and PhonePe. The move aims to foster growth while grappling with worries over market concentration.
Sources close to the matter reveal that the National Payments Corporation of India (NPCI), acting as a quasi-regulator, will extend the deadline by up to two years to limit any company's market share processing payments through the Unified Payment Interface (UPI) to 30 percent. This delay brings relief to PhonePe, backed by Walmart, and Google Pay, giving them more room to thrive in the competitive arena.
According to NPCI data, PhonePe's share of UPI payments surged to 48.3 percent, while Google Pay witnessed a slight decline to 37.4 percent. Together, they facilitated a staggering 11.5 billion transactions in April, highlighting their significant presence in the digital payments ecosystem.
Despite declining to comment, both NPCI and Google Pay remain pivotal players in this narrative. Meanwhile, PhonePe remained unresponsive to inquiries.
The genesis of UPI in 2016 aimed at promoting online transactions and curbing cash usage in India. However, the absence of transaction fees for this service restrained banks and other players like WhatsApp and Amazon Pay from aggressively promoting UPI-based payments. This passivity raised concerns among authorities regarding market concentration.
In contrast, PhonePe and Google Pay capitalized on their UPI customer base to diversify their offerings, delving into sectors like loans and insurance.
Initially proposed in 2020, NPCI's 30 percent cap aimed to introduce more competition into the market. However, subsequent extensions of the deadline, now reaching the end of 2024, signal the complexity of reducing the dominance of PhonePe and Google Pay without impeding UPI's growth.
Sources privy to the matter suggest that NPCI's aspiration for increased competition faltered when WhatsApp entered the UPI payments arena in 2020, capturing only a minuscule market share. Meanwhile, Paytm, holding the third-largest share, witnessed a decline in processed payments following regulatory interventions.
Payment firms advocate for the removal of market-share caps, proposing the introduction of transaction fees to invigorate competition. However, NPCI appears hesitant to abolish the cap, indicating a nuanced stance on the matter.
Despite a significant 49.5 percent year-on-year increase in UPI transactions in April, the growth rate slightly trailed that of March. This scenario prompted the central bank to convene with industry leaders, exploring strategies to expand UPI's user and merchant base.
As the digital payments landscape continues to evolve, the government's decisions play a pivotal role in balancing market dynamics, competition, and consumer interests. The latest postponement of market share caps reflects an ongoing quest for equilibrium in India's burgeoning digital economy.
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Instagram Testing Support for Cross-Posting Images to Threads: Report
New feature could streamline sharing between Meta platforms, boosting visibility for creators.
Instagram is experimenting with a new way to increase content reach. The platform is testing a feature that would allow users to simultaneously post images to both Instagram and Meta's standalone messaging app, Threads.
The opt-in feature appears as a toggle during the Instagram upload process. Early testers report that cross-posting is currently limited to still images, with Reels requiring manual upload to Threads.
As with the existing Facebook cross-posting tool, this feature seamlessly transfers the image caption to Threads. However, Threads doesn't currently use hashtags, so these will be removed on transfer.
Meta's move signals an effort to bolster Threads, positioning it as a more integrated part of the Meta family of social apps. It remains to be seen if the feature will reach full rollout and whether it will successfully draw more users to the microblogging.
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