More than 80 percent of digital transactions processed via the Unified Payments Interface (UPI) in India are handled by just two third-party app providers (TPAPs), an industry body representing fintech firms flagged. The note was sent to the Ministry of Finance (Finance Ministry) and the Reserve Bank of India (RBI), citing “systemic concentration risk” in India’s payments ecosystem.
In a letter dated October 29, 2025, the India Fintech Foundation (IFF) said, “UPI currently faces a concentration risk issue in that more than 80 percent of the volume of transactions on UPI happen through only two of its TPAPs.”
According to NPCI’s product statistics, UPI processed 19.63 billion transactions in September 2025, with a transaction value of about Rs 24.90 lakh crore. In August 2025, volume hit a record 20.008 billion transactions worth Rs 24.85 lakh crore. The value figures represent the total rupee value of those transactions.
The IFF letter, seen by Moneycontrol, has proposed major changes to the government’s incentive scheme for UPI and RuPay debit-card transactions. It says: “The government, RBI and NPCI can rewire the UPI incentive mechanism to ensure that other TPAPs receive a greater share of UPI incentives.”
The note also warns that the current structure “adds to the systemic risk in India’s largest payment system.”
One of the recommendations is introducing a cap on incentive flows, “The government’s UPI incentive scheme to banks should be capped at 10 percent per TPAP banks support. This would incentivise banks to diversify their partnerships, directly benefiting smaller TPAP challengers.”
Beyond competition, the IFF urges the policymakers to view UPI concentration through a strategic and geopolitical lens, noting, “State policies should ensure that the UPI stays resilient against any risks. Seen from a strategic or geopolitical lens, issues of ownership of TPAPs become a critical factor.”
With UPI volumes as high as nearly 20 billion transactions per month, any concentration in processing through just two apps carries risks – from stifled innovation to systemic fragility. A duopoly in such a critical infrastructure raises questions about fair access, competition and potential regulatory intervention, the letter said.
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