Number of UPI apps grows in 2024, yet top two command maximum market share

In 2024, NPCI issued 20 third party application approvals. This was much higher than three and four issuances in 2022 and 2023 respectively

In 2024, the National Payments Corporation of India (NPCI) approved 20 third-party Unified Payments Interface (UPI) applications, a record since UPI’s launch in 2016. This surge reflects growing interest from financial technology (fintech) companies, driven by the integration of credit products like UPI-linked credit cards and pre-approved credit lines. 

In October, NPCI Managing Director and Chief Executive Officer Dilip Asbe said that around 50 entities were keen on obtaining third-party application provider (TPAP) approvals, despite the current zero merchant discount rate regime on UPI payments.

  A surge in new participants may not necessarily make a sizeable dent in the market share of top players, PhonePe and Google Pay, who dominate nearly 85 per cent of the country’s UPI volumes. For most new applications, UPI is less about market share and more about leveraging payments as a gateway to higher-margin businesses like lending, insurance, and wealth management.

  “Even a 0.1 per cent UPI market share is sufficient to attract customers for cross-selling credit and insurance,” said a fintech executive who received a TPAP this year. 

Newer entrants like Navi and super.money have gained traction on the UPI leaderboard, ranking fourth and seventh, respectively. However, even these players hold less than 1 per cent market share, with Paytm, the third-largest, processing seven times more transactions than its closest challenger. Newly minted TPAPs prioritise their existing revenue-generating businesses, such as credit and wealth management, which have better margins than UPI payments. 

UPI payments remain free for users and merchants, with fintechs and banks bearing the payment processing costs for such transactions. Firms receiving approvals belong to diverse core business categories, including credit, wealth management, and payments. 

 

In 2024, firms such as Aditya Birla Capital Digital, Freo, Moneyview, INDmoney, OneCard, super.money, BharatPe, and others received TPAP approvals from NPCI. 

Just three firms received approvals to operate as TPAPs in 2022, and four entities bagged approvals in 2023, data from NPCI shows. There are 40 TPAPs operational in the country. 

As NPCI moves to enforce a 30 per cent limit on transaction volumes for individual players by the proposed year-end deadline, the industry is closely watching whether the influx of new TPAPs can challenge the dominance of established giants. In November 2022, the body had proposed a 30 per cent volume cap on TPAPs, with a deadline set for 2024. 

“Whether issuing more TPAPs will impact the market is yet to be seen, as the market cap target is not easily achievable in the industry,” said Ranadurjay Talukdar, partner and payments leader, EY India.

  Meanwhile, players specialising in verticals such as investments or lending will cater to the payment processing needs of these branches of financial services without needing to be one of the largest players in the UPI ecosystem.

  Obtaining a TPAP can take three to six months, provided the company satisfies regulatory requirements. “Even if some firms may not have payments as their core proposition, getting a TPAP approval can offer users payment convenience,” said Mohit Bedi, chief business officer and co-founder of Kiwi, a credit-on-UPI fintech.