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New NPCI guidelines bring bad news for UPI-only e-wallets
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SME Times News Bureau | 10 Sep, 2019
PhonePe's and Google Pay's success ride on the back of UPI will soon hit a road block
as the National Payments Corporation of India (NPCI) is all set to
introduce new guidelines for digital payment companies to minimise
concentration and systemic risks in UPI.
One of the important
provisions initiated by NPCI is to put a cap on the UPI market share of
digital payment companies. This move directly impacts UPI-only players
such as Walmart's Phonepe, Google Pay and to be
launched Whatsapp
Pay. Interestingly, Paytm is the only major player which is still
backing its wallet success and cards besides UPI.
Starting April
2020, PhonePe and Google Pay will have to limit their marketshare to 33
per cent which eventually blocks their growth plans. Till now, they have
been burning a lot of cash to gain the highest market share and this
move comes as a major setback.
Interestingly, Morgan Stanley had
recently referred Phonepe emerging as a major factor for a handsome
upstick in Walmart share-prices. However, this new capping may affect
the company's valuation jump and fundraising plans as it seeks $1
billion from Tiger Global, Tencent, DST Global, Softbank and others.
A
senior banker said on anonymity, "This exhibits NPCI's raising concerns
over the increasing security threats by non-banking payment companies.
Phonepe will have to re-visit its business strategy for a possible
fundraise at this stage."
Other industry veterans and experts
have applauded NPCI's move and are of the opinion that this will secure
the digital payments infrastructure in India.
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