Parliamentary Committee Urges Promotion of Indian Fintech Players

The Parliamentary Standing Committee on Communications and Information Technology has advocated for the promotion of domestic players in India’s fintech sector. This recommendation follows a statement by the Ministry of Electronics and Information Technology (MeitY), underscoring the dominance of foreign-owned platforms like Walmart-owned PhonePe and Google Pay, which together control 83.3% of the UPI market.

Presented in the Lok Sabha on February 8, the committee’s report titled ‘Digital Payment and Online Security Measures for Data Protection’ emphasizes the need to support local Indian entities in the fintech ecosystem. Although indigenous solutions like BHIM UPI exist, their market penetration remains limited. The committee suggests that regulatory oversight of Indian fintech apps would be more manageable for bodies like the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) compared to global counterparts with diverse jurisdictions.

MeitY highlighted that PhonePe accounted for 46.91% of UPI transaction volume from October to November 2023, with Google Pay close behind at 36.39%. In contrast, Indian fintech giant PayTM’s share stood at 12.32%, while others like Cred, Amazon Pay, BHIM, and WhatsApp Pay made up smaller percentages.

Despite UPI transactions comprising 73.5% of all digital payments by volume in FY23, their share by value was 6.668%, reflecting a steady increase from 0.536% in FY19. Real-time gross settlement (RTGS) and National Electronic Funds Transfer (NEFT) accounted for significant proportions of the total transaction value, with RTGS leading at 69.47%. However, RTGS’s share has been declining since FY19, while NEFT’s has fluctuated.

Regarding fraud via UPI, the Ministry of Home Affairs reported a relatively stable fraud-to-sales ratio between FY22 and FY24 (until September 2023), standing at 0.0016%. However, the absolute number of UPI frauds has increased, rising from 108,509 cases worth ₹130.95 crore in FY22 to 70,056 cases worth ₹142.52 crore in FY24 (until September 2023).