Currently Walmart backed Phonepe and googlePe have 80% of share in UPI transactions, followed by paytm ~10%. Now govt is trying bring upper cap of max 30% per app
Why no indian startups is trying to occupy this UPI space?
Mobikwik, Freecharge, Jio Money, Airtel Money, Tata Neu are all Indian apps providing UPI.
Apart from that there’s an official BHIM UPI app from NPCI
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But why are these apps not becoming dominant players in market?
Currently there’s no viable business model for UPI. All the apps are losing money.
Trying to dominate at this point of time would mean burning huge money by offering cashbacks without getting anything in return. They will also have to compete with deep pockets like Google.
So not only Indian but even some international players like WhatsApp are going slow currently till a clear revenue model emerges.
Disclaimer - This is my personal opinion and the actual reason could be something different
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In order to succeed in business, in some cases you have to be a monopoly. (Read Zero To One)
Telecom is highly competitive, only few can make money, there’s usually space for only 2 max 3 players. Similarly, UPI is going to go that way. Right now, there is no sustainable business model - if you’re not charging a single paisa for the transfer.
But if the govt puts a cap of 30%, they’re basically crushing competitive spirits and preventing free markets from establishing a credible player. Who would want to compete in that space?
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They’re actually encouraging competition by putting a cap. Otherwise one or two deep pocketed players will corner the entire market share and once the small players wind up, they will show their true colours.
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Only deep-pocket players can sustain a model that doesn’t make money. When you pay via UPI, do you pay anything? Convenience fee? Anything?
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Not yet. But some sort of fee may be levied in future. RBI has already floated a discussion paper on it.