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In today’s newsletter:

• Data protection bill clears Lok Sabha hurdle
• VSS becomes largest shareholder in Paytm
• UPI innovation threatens PhonePe, GPay duopoly

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In 2018, when a data protection legislation was first envisioned, its formulators could not have imagined that it would take five long years for the bill (or any of its versions) to be passed in the Lok Sabha.

The previous version of the bill was tabled in Parliament twice: once in 2019, after which it was referred to a Joint Parliamentary Committee, and again in 2021, when the committee tabled its report with several changes to the bill. 

• However, that bill was subsequently scrapped by the government

The new Digital Personal Data Protection (DPDP) bill passed a milestone today when it was finally passed in the Lok Sabha, albeit amid protests from the Opposition.

• The Bharatiya Janata Party enjoys a majority in the lower house of the Parliament

What next? The bill will be taken up in the Rajya Sabha for a vote. However, there are three factors to consider:

• Normal parliamentary proceedings will be suspended from August 8-10 due to the no-confidence motion against the BJP government
  
  
• The BJP lacks a clear majority in the Rajya Sabha
  
  
• The monsoon session of Parliament ends on August 11

So, it remains to be seen if the DPDP Bill will be taken up in the Rajya Sabha on August 11. And if it is taken up, whether it will be able to overcome the more substantial roadblock in the Rajya Sabha due to the government's lack of majority.

Meanwhile, in Parliament today, Minister for Electronics and Information Technology Ashwini Vaishnaw issued several clarifications regarding concerns that have been raised about exemptions to the government from the provisions of the bill, and about how rules will be formulated after the DPDP bill is enacted into law.

Paytm's Vijay Shekhar Sharma is in the spotlight today after signing a unique deal with Ant Financial Services (Antfin), a long-time investor in the fintech major.

Paytm announced in an exchange filing that Ant has reduced its shareholding by 10.3%, and these shares will be transferred to Resilient Asset Management, an entity that is fully owned by Paytm founder Sharma. 

• This makes Sharma and the promoter entity the biggest shareholders of Paytm.

In consideration of the acquisition of the 10.30% stake, Resilient will issue Optionally Convertible Debentures (OCDs) to Antfin. Prior to the deal, Antfin held approximately a 23.79% stake in Paytm.

The deal significantly reduces the Chinese influence on Paytm, which could be an advantage for the fintech company.

 “I am proud of Paytm's role as a true champion of made-in-India financial innovation…As we announce this transfer of ownership, I would like to express my sincere gratitude to Ant," Sharma wrote on Twitter.

Go deeper

UPI is India’s most widely used online payment method, but most transactions are done on just two apps.

• Google Pay and PhonePe currently have over 80% of the market share, with 33% and 47%, respectively

The dominance has remained unchanged over the past two years. Paytm’s market share remains at 13%, and potential contenders such as Amazon Pay, WhatsApp Pay, and Cred have struggled to gain a foothold.

The National Payments Corporation of India (NPCI), which runs UPI, is concerned about the dominance of a few UPI apps.

• It has said that no UPI app should have more than 30% market share

However, it has not been able to implement this because it would disrupt the ease of payments on the platform.

Thankfully, NPCI continues to innovate at a furious pace. It has come up with the UPI Plugin, which can be integrated into merchant apps like Flipkart, Myntra, Dream11, Swiggy, and Zomato. This will allow customers to complete payments without having to go to a UPI app, reducing the role of PhonePe and Google Pay.

Payment gateway and processing companies such as Razorpay and Juspay are helping large merchants implement the UPI Plugin. 

• A few merchants will go live over the next few quarters

For customers, not having to go to a UPI app to complete a transaction will enhance the success rate of their UPI payments.

Find out more

• Shoddy guidebooks that appear to have been compiled with the help of generative AI and promoted with deceptive reviews have flooded Amazon in recent months.

• ChatGPT has become worse at performing certain basic math operations due to a phenomenon known as drift.

While India's third lunar space mission, Chandrayaan 3, is progressing on schedule, today was another milestone day for commercial space technology in the country.

• GSAT-24, India's first demand-driven satellite, has been commissioned by TataPlay to beam 900 television channels from space

New Space India Limited, which operates GSAT24, expects one or two such commercial launches every year from now on.

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