(MENAFN- KNN India) New Delhi, May 9 (KNN) Representatives from the United Payments Interface (UPI) ecosystem convened with senior Reserve Bank of India (RBI) officials on Wednesday, advocating for regulatory measures that would make UPI transactions more financially viable, especially for smaller service providers.
A key issue raised was the dominance of major players like Google Pay (47 per cent market share) and PhonePe (37 per cent), creating challenges for smaller competitors to gain traction.
The closed-door meeting included RBI Governor Shaktikanta Das, Deputy Governor T. Rabi Sankar, executives from the National Payments Corporation of India (NPCI), banks, third-party app providers, and technology service providers.
Smaller UPI entities proposed the introduction of merchant fees for larger merchants, citing difficulties in expanding operations without a sustainable revenue model.
Currently, no transaction fees are charged to customers despite customer acquisition costs borne by providers. However, instituting charges on UPI transactions contradicts government policies discouraging such fees.
Bank representatives assured the RBI that their core banking systems can handle increased UPI transaction volumes. Discussions also covered strategies to enhance UPI accessibility for senior citizens and integrate more users into the digital payments ecosystem.
The RBI stated the meeting centered on widening UPI adoption and usage. Scaling infrastructure, expanding product offerings, addressing provider challenges through innovative solutions, and seeking UPI player input on user integration were also discussed.
A previous proposal by NPCI to cap third-party app providers at 30 per cent volume share after two years could prove challenging for smaller UPI players to meet by the December 2024 deadline. India currently has over 25 UPI service providers besides the dominant Google Pay and PhonePe.
Developed by NPCI, UPI enables real-time inter-bank fund transfers via mobile utilising two-factor authentication.
(KNN Bureau)
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