Tech3 | NPCI grapples with UPI duopoly; Simpl lays off employees; and more

In yesterday's Tech3 newsletter, NPCI grapples with UPI duopoly; Simpl lays off employees

Big round in SaaS: Atlan raises $105 million from GIC, Meritech Capital

One quick thing: IIT-Madras raises all-time high funding of Rs 513 crore in FY24

In today’s newsletter:?

• NPCI in a bind as UPI duopoly strengthens
• BNPL Simpl lays off 160 employees?
• India not in AI arms race: Nandan Nilekani

NPCI in a bind as UPI duopoly strengthens

Paytm's recent slump in the UPI market share has created a precarious situation for the National Payments Corporation of India (NPCI).?

• PhonePe and Google Pay, the two frontrunners, have tightened their grip on the market, collectively holding a whopping 90% share

Market share shift: Paytm's fortunes have taken a sharp turn for the worse. Over the past few months, its UPI market share has plummeted to 8.4%, a drop of 5 percentage points since April 2023.?

• This decline paved the way for PhonePe and Google Pay to flourish, with their shares increasing two and three percentage points, respectively

NPCI's balancing act: This trend towards a duopoly prompted NPCI to intervene in late 2020. Recognising the risk of over-dependence on a few players, they issued a directive in 2021 to promote a more balanced UPI ecosystem.?

• The proposed solution? A 30% market cap for individual third-party apps

The directive, scheduled for implementation by end of 2022, was subsequently postponed for two years.

?

Underlying concerns: UPI reigns supreme in India's digital payment landscape, accounting for 80% of all online transactions.?

• Enforcing market caps could potentially stifle healthy competition and invite legal challenges

After all, these apps have diligently adhered to NPCI's guidelines while operating on a government-backed platform.?

• Over 70 apps are vying for customer attention in this cutthroat market, including prominent internet companies

The future of UPI:?Meanwhile, the Reserve Bank of India (RBI) is optimistic about UPI. Governor Shaktikanta Das today met with key UPI players to discuss expansion strategies.?

• From scaling up infrastructure to innovative user inclusion plans, the focus is on getting more Indians on board the digital payment train

This is a short version of the MCTech3 newsletter. Sign up here?to get the full edition in your inbox every evening on weekdays.