Companies like PhonePe and GooglePay, which have been successful due to UPI, are now going to get shocked, as the National Payments Corporation of India (NPCI) has issued new guidelines for digital payment companies. These guidelines have been released to reduce concentration and systemic risk in UPI.
One of the important provisions that NPCI has announced is to set the limit of UPI market share of digital payment companies. The move will directly harm UPI-only companies, including Walmart’s PhonePay and Google Pay as well as the soon-to-be-launched WhatsApp. Interestingly, Paytm is the only major company, which apart from UPI, also does business on its own wallet and cards.
From April 2020, PhonePe and GooglePay will have to keep their market share in the range of 33 percent, which will eventually block their development plans. These companies have invested far more to gain the highest market share, and this step is a big setback for them.
Interestingly, Morgan Stanley had recently given great credit to PhonePe’s success in increasing Walmart’s share prices, but the new policy of setting limits would also shock the company’s valuation and funding plans, as it would tiger Global is in the process of raising $ 1 billion from Tencent, DST Global, SoftBank, and others.
A senior banker told news agency IANS on condition of anonymity, “This reflects NCPI’s concerns over the increasing security threats by non-banking payment companies. Now PhonePe will have to reconsider the business strategy to raise finance.”
A class in support
At the same time, other stalwarts and experts of the industry have praised the move of NPCI and they are of the opinion that this will secure the digital payment infrastructure in India.