Breaking The UPI Duopoly: New Entrants Tap Niche Models To Drive Growth

Presently, out of over 75 UPI apps, only two—PhonePe and Google Pay—account for over 85% of all UPI transactions in India, by volume and value, according to data available with the National Payments Corporation of India.

As many as 17 new TPAPs, or third-party application providers, have gone live with their own UPI offerings in 2024. While the new entrants include established players like Aditya Birla Capital Digital and Flipkart, the list is dominated by little-known names. These service providers are looking to target niches and not compete in the mass market.

"A majority of the market share is with two players, and to break that duopoly, it's not going to be one player; it will be multiple players with different value propositions," said Bhargav Errangi, founder of POP, a new entrant that has quickly gained traction.

POP went live with its UPI offering in June this year and has recorded 30 lakh UPI transactions a month. The company aims to hit between 60-70 lakh transactions in November alone.

"Even 10-20 million transacting users can be achieved with a niche," he said. "The newer players are hoping to build 1-2% market share across 10 of them, rather than having a single, large third player come in."

This is possible because larger apps are unable to focus on a 5-10 million audience set that wants a particular solution around UPI. POP offers a rewards system targeted at frequent online shoppers aged between 18 and 32.

Another fresh use case is GenWise, which has gone live with its UPI offering this month. GenWise added UPI payments to its existing application, which is catered towards India's 25 crore elders.

The elderly have remained "less connected" to online payments due to fear of the unknown and complex interface of other apps, according to Rajat Jain, co-founder at GenWise.

GenWise UPI has also built an audio-based user interface, apart from extra security features like geo-fencing and biometric app authentications for senior citizens. It has also added UPI's latest features, a UPI Lite wallet, which allows small, offline transactions, and UPI Circle, which allows other members of the family to complete transactions within limits.

The company's goal is to now take UPI to at least 2 crore elders over the next two years. "We are also working to launch never-before-seen retirement planning and wealth management solutions for this important demographic," he said.

Another player is FamApp, which is currently targeted only at teens. The company is testing NamasPay, a UPI app meant for foreigners travelling to India.

"NamasPay is an experiment; we're testing it with a very small pool currently," said co-founder Sambhav Jain. "There isn't much there from a data perspective, because it's totally new. There's no precedence on overcoming challenges around KYC, mode of payments, international credit cards, etc. It's not 100% live yet," he said.