Working on increasing BHIM market share in UPI: FinMin

The Union finance ministry has said the National Payments Corporation of India (NPCI), the umbrella body for operating retail payments and settlement systems in India, is working towards increasing the market share of the BHIM App in Unified Payments Interface (UPI) transactions.

Answering a question on the delay of market cap implementation in UPI, minister of state in the finance ministry Bhagwat Karad says the third-party application providers (TPAPs) only provide a "user interface" to customers for linking a bank account and initiate or receive UPI transactions.

"They are connected to the UPI network through payment service providers (PSPs), which are necessarily banks," says the minister.

He says while the TPAPs have access only to the transaction level data like transaction amount, reference number, and transaction date, they do not have access to critical user information like a bank account, UPI Pin, etc. "TPAPs do not handle funds in the entire transaction flow and they only pass the information to and fro through their PSP bank."

On the question of foreign players dominating indigenous innovation like UPI, Karad says the UPI framework provides a completely open and level-playing architecture, where a customer can link his operative account to any UPI App.

"The UPI landscape has recently witnessed the emergence of several new players joining as TPAPs. Further, NPCI is working towards increasing the market share of the BHIM App in UPI transactions. NPCI has also informed that the customers have a wide range of options with over 70+ providers competing in the open market to attract customers."

UPI has seen immense popularity in the recent past, with the total value of UPI transactions touching ₹14,75,464.27 crore in June 2023, way up from ₹10,14,384 crore in June 2022. In volume terms, the UPI transactions surged to 9,335.06 million in June 2023 as compared to 5,862.75 million in June 2022. In the UPI space, three major players PhonePe, Google Pay, and Paytm command around 96% of the entire UPI transactions value.

Making its international foray, a real-time payments link between the UPI of India and PayNow of Singapore was launched in February this year, making Singapore the first country with which a cross-border person-to-person (P2P) payment facility.

Now Japan has also shown interest in joining UPI. Japanese digital minister Kono Taro in May 2023 said Japan and India were trying to promote digital cooperation. "We are now seriously thinking about joining Indian UPI, the payments system.”

Masahiko Metoki, director general of Universal Postal Union (DG UPU), a UN agency that coordinates postal policies among member nations, met Union minister Ashwini Vaishnaw on July 18, 2023, and agreed to evaluate the UPI platform for integrating it with cross-border money remittance through postal channels.

To popularise UPI, the Cabinet, chaired by Prime Minister Narendra Modi, has also approved the incentive scheme for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (person-to-merchant) with a financial outlay of ₹2,600 crore.