Invest1 publisher3 min readPublished Updated
The UPI duopoly captured 69% of August's growth off a 78% share of volume
PhonePe's 11.19 billion August transactions and Google Pay's 7.91 billion still dominate UPI, but Navi supplied about a sixth of the month's new payments, and October's 0.4% merchant fee will pay by ticket size.
The Investor · Invest desk
What happened
- PhonePe recorded 11.19 billion UPI transactions in August against 10.86 billion in July, or 45.64% of all UPI volume, according to National Payments Corporation of India data.
- Google Pay held second place with 7.91 billion transactions and 32.26% of volume, processing Rs 10.07 lakh crore for a 33.78% share of value.
- The two apps together took 77.90% of August volume and 81.60% of value, and adding Paytm brings the top three to 85.93% of volume and 88.47% of value.
- UPI as a whole handled 24.51 billion transactions worth Rs 29.82 lakh crore in August, against 23.66 billion worth Rs 29.88 lakh crore in July.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint Fee income from October is a function of ticket size, so Navi's 4.40% of volume at about Rs 486 a payment buys almost no claim on a pool that only opens above Rs 2,000.
- capability CRED holds 1.92% of UPI value on 0.59% of transactions. A size-based fee pays it more than a tenth-place ranking by count implies.
- decision Apps now have a reason to compete for merchant payments above Rs 2,000 instead of raw transaction counts, because counts below the floor earn nothing.
- contradiction Measured as a stock, the market is a two-app duopoly; measured as August's flow, it is meaningfully less concentrated, and the choice of measure decides whether challengers are being squeezed out.
Split the month's added transactions by app and the concentration picture loosens at the edges. The system took on about 850 million more payments in August than in July [1]. PhonePe supplied roughly 330 million of that and Google Pay roughly 260 million, so the pair accounted for about 69% of the new transactions, some eight and a half points below their combined share of the base [2][3][11]. Navi supplied about 133 million, close to 16% of everything new, on a 4.40% volume share [6][4]. Flipkart-backed super.money went the other way, down 3.5% to 421.87 million [7][17].
Entrackr's report of the NPCI figures sets August against July and stops there, so one month of flow is thin evidence for a direction.
Ticket size is where these apps actually differ. PhonePe averaged about Rs 1,274 a payment in August and Google Pay about Rs 1,273, close enough to be the same business [7][8]. Paytm came in near Rs 1,041 [9]. Navi, the fastest grower in the top four at about 14% month on month against PhonePe's 3.0%, averaged about Rs 486 [5][6][10]. CRED ranked tenth by count with 143.94 million transactions and moved Rs 57,398 crore, about Rs 3,988 each, or 3.1 times PhonePe's average [8][11].
From October 15, select person-to-merchant transactions above Rs 2,000 carry a 0.4% MDR, capped at Rs 300 on transactions of Rs 75,000 and above, with the fee shared among banks, PSPs and the payment apps [12]. The cap sits exactly where 0.4% of Rs 75,000 comes to Rs 300, so above that size the effective rate falls as the payment gets larger [16]. Of the averages above, only CRED's clears the Rs 2,000 floor.
The ceiling on what this can be worth to PhonePe is 0.4% of its entire August value, or Rs 5,704 crore [15]. The real figure is far below that, since only select merchant payments above Rs 2,000 qualify and the fee is split across the ecosystem. NPCI's table does not break out ticket sizes by app.
I would expect the fee to pull the revenue ranking away from the volume ranking. A 4.40% share of counts at Rs 486 a payment contributes close to nothing to a pool that starts at Rs 2,000, while PhonePe's 47.82% of value and CRED's 1.92% of value on 0.59% of counts get paid by size [6][3][8][12]. Two things would show that read wrong. If the qualifying slice of value turns out to track volume share instead of value share, the pool pays out along the existing rankings. And the eligible base is shrinking at the bottom: the system's average payment fell from about Rs 1,263 in July to about Rs 1,217 in August, down 3.7%, as volume rose 3.6% and value slipped 0.2% [13][14].
What to watch
- September NPCI data, and whether the duopoly's share of new transactions climbs back above its share of the base.
- Whether the system's average payment keeps falling below about Rs 1,217, shrinking the pool of transactions above the Rs 2,000 MDR floor.
- How the 0.4% fee is divided among banks, PSPs and payment apps once the October 15 framework starts.