With UPI transactions dominated by a few apps, India faces challenges similar to Europe’s battle against payment duopolies.
The India Fintech Foundation (IFF) has reportedly written to the nation’s Finance Ministry, warning two third-party apps handle more than 80% of Unified Payments Interface (UPI) transactions.
The letter, sent on October 31, called for government action to prevent market concentration and give smaller fintechs a fair chance to compete.
The group said the dominance of these two firms poses “systemic risks” which could slow innovation and limit options for banks, merchants and consumers over time.
Trade Brains reported as of September 2025, PhonePe accounted for 45.6% of UPI transactions, followed by Google Pay at 34.8%, with Paytm and Navi capturing smaller shares at 7.1% and 2.7%, respectively.
Looking at ways to solve the problem, the IFF proposed a 10% cap on UPI incentive payouts for banks supporting a single TPAP, encouraging them to work with multiple providers. It also suggested changes to UPI and RuPay incentive schemes to better support new fintechs.
A similar rule was introduced by the National Payments Corporation of India (NPCI) in 2020, aiming to cap any single TPAP’s share at 30%, but its implementation has been delayed until December 2026.
The IFF warned without action, smaller players may struggle to grow, innovation could slow and market power would continue to concentrate.
Europe offers a warning
India’s adoption of digital payments has made it one of the world’s most important fintech markets, with UPI playing a central role.
The system now handles billions of transactions each month, offering instant, low-cost payments for everything from peer-to-peer transfers to merchant purchases, and most recently, pre-approved credit.
The scale of the market has caught the attention of global companies such as Revolut and other international fintechs looking to expand in the country.
The IFF’s concerns about concentration stifling innovation are echoed by examples in Europe, where merchants and regulators are challenging dominant players.
Earlier this year, European retailers formally petitioned the European Commission to rein in Visa and Mastercard, citing an “opaque system” of rising fees that leaves merchants with little choice.
Francesco Simoneschi, CEO of TrueLayer, said: “For too long, businesses have been trapped in an opaque system with a lack of choice or competition.”
The coalition called for antitrust enforcement, fee caps and greater transparency to counter the duopoly’s influence.
Europe has also looked to use the unrest to promote homegrown alternatives. The Payments Group partnered with Bluecode to launch a pan-European mobile payment solution, while initiatives like the European Payments Alliance and European Payments Initiative aim to interconnect local payment services across the continent.
