Consumers savour choice as biggies battle for top slot; PhonePe leads the race in UPI transactions

Though the overall digital payments through Unified Payments Interface (UPI) dipped in February, Walmart-backed PhonePe has retained its numero-uno position with a bigger margin. While PhonePe steadily increased its share in the market, the second largest player in the market, Google Pay reported a drop in the number of transactions it managed, according to the latest data published by the National Payments Corporation of India (NPCI) for February, 2021.

PhonePe handled 975.5 million transactions in the month, accounting for Rs 1.9 1akh crore in total value. In January, it handled 968.7 million transactions. On its part, Google Pay managed 827.9 million transactions in February as against 853.5 million in the previous month, recording a dip in month-on-month growth in the volume. It handled a total of Rs 1.74 lakh crore in value terms in February.

Paytm Payments Bank App remained a distant third with 340.7 million transactions, accounting for 38,493.5 crore.

Another leading player Amazon Pay has notched up 44.2 million transactions, marginally less than 46.3 million it handled in January, 2021.

BHIM (Bharat Interface for Money), NPCI-owned payment app based on UPI, has continued to feature far below its peers. In February, it handled 20.4 million transactions, down from 23.4 million reported in January.

Indian banks have continued to remain backbenchers despite the fact that UPI has caught the fancy of the new-gen. UPI, one of the biggest fintech revolutions in post-independent India, has been growing leaps and bounds in 2020-21. Among the banks, Axis Bank handled 64.7 million transactions (including B2C transactions), ICICI Bank handled 9.93 million and SBI App, 4.13 million.

In February, however, the overall number of transactions has dropped marginally, owing to the fewer number of days available in the month. It reported 2,292.9 million transactions during the month, a shade below 2,302.7 million transactions reported in the previous month. Industry officials believe that March, being the fiscal-end, will see a surge in digital transactions.

NPCI has already capped the volume of transactions via UPI on third-party apps at 30% beginning January 1, 2021. All three leading players who are already in the 30%-bracket have been given two years to bring down their exposure phase-wise below 30%, amid criticism that NPCI is trying to stifle competition. NPCI said the move is to address the risks and protect the UPI ecosystem as it further scales up.

Simultaneously, the RBI has invited private entities to set up NPCI-like companies with a serious plan to bring in competition in the fast-growing digital payment market in the country. The plan is to expand the market with a flurry of new innovative products. The central bank has begun the process of inviting potential companies which will set up digital payment platforms in competition with NPCI. The new entities once approved will hopefully complement NPCI’s efforts towards enhancing retail access and scope in digital payments. The RBI has extended the deadline for companies to file an application seeking the licence to March 31, 2021.