Address concentration risk on UPI payments: IFF to government & RBI

New Delhi: The India Fintech Foundation (IFF) has urged the finance ministry and the RBI for immediate intervention for safeguarding concentration risk on UPI, saying over 80 per cent of its transaction volume is controlled by only two players.

India Fintech Foundation (IFF), the proposed self-regulatory organisation (SRO) for the fintech industry, was launched at the Startup Mahakumbh in April.

It has submitted a policy recommendation note

titled “Policy Options for Mitigating Concentration Risk on UPI” to the Ministry of Finance and the Reserve Bank of India (RBI).

“This note has been prepared after extensive consultation with our member fintech institutions and draws on global precedents to propose balanced, market-friendly approaches to strengthen competition, inclusion, and systemic resilience within the UPI framework,” the note said.

It further said UPI currently faces a concentration risk issue in that more than 80 per cent of the volume of transactions on UPI happen through only 2 of its about 30 third-party application providers (TPAPs).

“In other words, only 2 of the TPAPs (T2 TPAPs) control more than 80 per cent of the payment volume on UPI,” it said.

Highlighting the “real risks” caused by T2 TPAPs, IFF said the duopoly uses “predatory pricing (deep discounts, cashbacks) to crowd out” the relatively smaller, indigenous competitors.

Even state-led platforms like BHIM have seen their market share erode due to the duopoly’s capital and user engagement advantages, it added.

According to IFF, the lack of monetisation opportunities (zero MDR) combined with the incumbents’ capital advantage creates significant entry barriers for new and smaller players, stifling competition, cost reductions, and service enhancements.