Tata to soon enter the UPI market of India

Top digital payment systems like Google Pay, PhonePe, Amazon Pay, and Paytm may soon face new competition in the Tatas, a century-old business that has essentially recorded India’s transition into industrial adulthood.

People familiar with the subject informed ET that the famous salt-to-steel company is seeking authorization from the National Payments Corporation of India (NPCI) to begin operating on the Unified Payments Interface (UPI) as a third-party payments service provider delivering digital payments services.

This is part of the Tata Group’s overall strategy to have a significant presence in the internet economy. According to sources familiar with the situation, the Tata Group is in talks with private lender ICICI Bank to power its UPI infrastructure through its digital commerce unit Tata Digital. According to sources familiar with the situation, it has also held talks with another major private sector lender about becoming a banking partner.

To gain access to UPI railroads, non-banking firms like PhonePe and Google Pay must partner with banks. Non-banking apps have done better on UPI, capturing the majority of the market share, thanks to a technology-focused approach to better serve users. For example, PhonePe and GooglePay account for the majority of UPI transactions each month, with Amazon Pay, Paytm, and Facebook-owned WhatsApp Pay rounding out the top five.

When coping with high transaction volumes, UPI apps choose to collaborate with many banks to spread the load. GooglePay, for example, accepts UPI from the State Bank of India, HDFC Bank, and ICICI Bank.

“The Tatas have applied to the NPCI to operate as TPAP (Third Party Application Providers) and are hoping it can go live next month,” a person aware of the matter said.

This comes when Tatt Digital has also finalised plans to launch its much-awaited Super app, Tata Neu, next month, coinciding with its launch with the Indian Premier League (IPL), ET reported on March 15. “They (Tata group) want to have this ready by the time Tata Neu is launched so more UPI payments can be enabled across the super app with ease,” one of the people mentioned above said.

According to NPCI data, UPI processed 4.52 billion transactions in February. Tata Digital and ICICI Bank did not respond to emails made to them. NPCI’s spokeswoman did not immediately respond to a request for comment. Tata Digital has set up a new financial marketplace firm, Tata Fintech, in January to offer a variety of financial goods, including a retail payment gateway, according to ET.

The Tata Group’s participation in the UPI network is a natural extension of its ambitious online commerce strategy, which can benefit from UPI payments. Amazon India, for example, has its own UPI service that provides customers with cashback and other incentives.

If the Tatas are allowed permission, it will bring a new dimension to the much-debated UPI market share cap problem. New participants are not allowed to process more than 30% of overall UPI transaction volumes in the preceding three months, according to the NPCI. Existing players like PhonePe and Google Pay, on the other hand, have been granted until the end of 2022 to comply with the directive.

WhatsApp Pay is one of the most recent UPI participants. In November of last year, the National Payments Corporation of India (NPCI) approved the expansion of WhatsApp Pay to 40 million users, up from the previous maximum of 20 million.

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