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This new feature “UPI plugin” by NPCI will disrupt Google Pay, PhonePe & PayTM

NPCI of India launches a new plugin capability of UPI where businesses can install this plugin into their apps for direct payments without need of any payment apps.

Unified Payment Interface (UPI) introduced by National Payments Corporation of India (NPCI) is one of the world’s leading digital payment modes, that’s accounted for its simple, faster and effective transfers. Other countries like Singapore, UAE, France and more have adopted India’s UPI system for its potency.

Earlier, RBI has released UPI-Lite feature that’s even more easy, and faster in digital payments. Following it, UPI Plugin hops in and will help businesses greatly, by providing users a clean and direct way to transfer money easily.

What is UPI Plugin?

NPCI launches UPI Plugin service to enable UPI integration with merchants directly, avoiding the need of third-party apps like Google Pay, PhonePe and PayTM. The bank extends their PSP bank SDK to integrate with Merchant’s app (partner app), allowing businesses to hold digital payments within their app itself.

Say for example, if you are ordering food in Zomato, and paying it online via UPI, you have to get into traditional payment apps like Google Pay, PhonePe and PayTM to make the payment. But with this UPI Plugin, apps will be able to integrate the UPI within itself, easing the process little bit.

It goes with every merchant from all levels such as from Zomato, PVR to small businesses or departmental stores who have their own apps. The apps of businesses can equip this plugin to provide inline payment experience for the users by means of entering the UPI Pin in the app, allowing for full UPI functionality.

Will Google Pay, Phone Pe and PayTM get affected?

Google Pay, PhonePe and PayTM are the tri-polies of digital payment system of India, accounting for 47%, 33% and 14%, which is 94% of all UPI payments collectively. UPI Plugin might alter this market share, as people would no longer need a third-party app for in-app purchases / payments.

“If large merchants like Swiggy, Zomato, Flipkart, Myntra and Dream 11 move to in-line or in-app payments it will be a huge setback to Google Pay and PhonePe. This could help bring their market share substantially. They have every reason to be scared,” says a senior executive who works closely with NPCI, which runs UPI.

While 57% of all UPI payments are merchant transactions, in which half of these are online, the payment apps could lose lump of its customers, if merchants started adopting this UPI Plugin.

NPCI had also insisted a rule that no single third-party application provider should have more than 30% market share on UPI platform to eliminate the monopoly. Any player with over 30% would have to restrict their customers from reaching them. All payment apps should comply to this, before December 31, 2024, NPCI said.

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