The Reserve Bank of India (RBI) has a message for Paytm, PhonePe, Amazon Pay, Google Tez and now Facebook. It does not want just a few big companies to dominate India’s digital payments sector. In its ‘Statement on Developmental and Regulatory Policies’ released today, the RBI has warned of a concentration risk in the retail payments sector.
“With the maturing of the retail payments market, it is important that the concentration risk in retail payment systems is minimized from a financial stability perspective. The Reserve Bank plans to encourage more players to participate in and promote pan-India payment platforms so as to give a fillip to innovation and competition in the sector,” it said. The RBI will put out a policy paper in this regard for public consultation by September 30, 2018.
After demonetisation, there has been a spurt in digital payments in India which has attracted a number of big players. Early mover Paytm was the biggest beneficiary of demonetisation which made a large number of people take to digital payments.
Facebook, the latest entrant to the sector, is set to launch its WhatsApp payment services in the whole of India soon. Google, Amazon and Paytm Mobikwik and PhonePe are the major digital payments companies operating in India.
Paytm emerged as the country’s most preferred digital payments platform in April, accounting for a third of the 190 million unified payments interface (UPI)-based transactions recorded in the month, according to an ET report citing sources in the banking industry. The e-commerce and digital payments company registered 62.9 million transactions and was followed by Yes Bank with 22% share at 42.4 million payment. Yes Bank’s transactions are mainly generated through Flipkart-owned payment application PhonePe.
The RBI is keeping a sharp eye on digital payments industry. In April, the central bank asked the global behemoths to host India-relevant data within the country and bringing oversight rules on a par with what is prevalent in Asia’s richer neighbourhoods.
The RBI directive to store all user data on servers within India by October sharply divided the industry. While local companies such as Paytm and Flipkart-owned PhonePe have welcomed the move, global technology firms have voiced strong concerns over it.