The National Payments Corporation of India (NPCI) has recently launched a new innovation called UPI Plugin, which allows online merchants to collect payments without the need for a separate payments app. This could pose a challenge to PhonePe and Google Pay, which are the two leading UPI apps in India.
UPI Plugin is a software development kit (SDK) that merchants can integrate into their own apps. This allows customers to pay for goods or services directly within the merchant’s app, without having to switch to a separate payments app.
PhonePe and Google Pay have expressed concerns about UPI Plugin, arguing that it could lead to a loss of market share. They also say that the plugin is not as secure as using a dedicated payments app.
However, NPCI says that UPI Plugin is just as secure as using a separate payments app, and that it could actually improve security by reducing the number of steps involved in the payment process.
It remains to be seen whether UPI Plugin will be successful, but it has the potential to shake up the UPI market. If it is adopted by a large number of merchants, it could lead to a decline in the market share of PhonePe and Google Pay.
Key benefits of UPI Plugin:
- It is more convenient for customers. Customers no longer have to switch between apps to make payments.
- It is faster. The payment process is streamlined, which can save customers time.
- It is more secure. The payment data is encrypted, which helps to protect it from fraud.
- It is more affordable. Merchants can save money on transaction fees.
Challenges that UPI Plugin faces:
- It is a new technology, so there is some uncertainty about how it will be adopted by merchants and customers.
- It requires merchants to integrate the SDK into their apps, which can be a complex process.
- There are concerns about security, as the payment data is stored on the merchant’s servers.
Overall, UPI Plugin is a promising new innovation that has the potential to disrupt the UPI market. It is still in its early stages of development, but it has the potential to make it easier, faster, and more secure for people to pay for things online.
Current Market Share
- The UPI market share is PhonePe 47%, GooglePay 33% and Paytm 13%.
- In July 2023 there were 9.96 billion UPI transactions with a value of Rs. 15.34 lakh crores.
- 60% of all online transactions are via UPI.
- 57% of all these UPI transactions are merchant transactions.
NPCI does not want any single UPI app to have a market share of over 30%. It aims to disrupt the UPI duopoly with the UPI plugin.
Evolution of the UPI Market
- UPI Plugin could lead to a decline in the market share of PhonePe and Google Pay. These two apps are currently the dominant players in the UPI market, but they could lose market share if merchants start to adopt UPI Plugin.
- UPI Plugin could open up the UPI market to new players. Smaller merchants and startups may be more likely to adopt UPI Plugin than PhonePe and Google Pay, which can be expensive to use.
- UPI Plugin could lead to more innovation in the UPI market. Merchants and payment providers will be looking for ways to make the most of UPI Plugin, which could lead to new and innovative payment solutions.
It will be interesting to see how UPI Plugin evolves and how it impacts the UPI market in the years to come.