Rising Risk in India’s Digital Payment System: UPI’s Overdependence on Just Two Apps Sparks Industry Concern
India’s Unified Payments Interface (UPI) has transformed the country’s digital economy, making cashless transactions a part of everyday life. However, the growing dominance of just two mobile payment apps has raised alarms about overdependence and concentration risk in the nation’s digital payment ecosystem. According to the India FinTech Foundation (IFF), over 80% of all UPI transactions currently flow through these two platforms — a situation that could pose serious stability challenges if not addressed soon.
The Growing Concentration Risk
While UPI has been hailed as one of India’s greatest fintech successes, the IFF warns that the overwhelming control of two major players could turn into a single point of failure for the system. If either of these apps faces a technical outage, cyberattack, or regulatory dispute, it could disrupt millions of transactions across the country within minutes.
IFF emphasized that such dependency contradicts the core principle of resilience in financial systems. For a robust and secure digital infrastructure, the market must remain diverse and competitive, not concentrated in the hands of a few giants. The foundation has urged the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) to take immediate corrective measures.
UPI’s Current Landscape: A Billion Transactions, Two Gatekeepers
As per NPCI data for September 2025, UPI processed 19.63 billion transactions worth nearly ₹24.9 lakh crore. The figures reaffirm UPI’s unprecedented growth — but they also reveal the imbalance in its distribution. Just two apps reportedly handled four out of every five UPI payments, leaving smaller Third-Party App Providers (TPAPs) struggling to gain ground.
This dominance not only limits innovation but also increases systemic vulnerability. In a highly interconnected payment network like UPI, even a short-term disruption in one dominant player’s service can trigger widespread transaction failures, leading to loss of consumer trust and operational inefficiency for merchants and banks alike.
Industry Recommendations for a Healthier Ecosystem
To address these risks, the India FinTech Foundation has proposed a set of reforms to promote fair competition and innovation within the UPI ecosystem. The recommendations include:
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Revising the UPI Incentive Policy:
Provide financial and infrastructural support to smaller TPAPs to help them scale sustainably. -
Encouraging Open Innovation:
Promote collaboration between banks, fintech startups, and digital payment companies to ensure technological diversification. -
Setting Market Share Caps:
Introduce reasonable limits on the market share of any single UPI app to prevent monopolistic dominance. -
Enhancing Infrastructure Resilience:
Strengthen redundancy mechanisms to ensure that no single point of failure can paralyze the payment network.
By implementing such measures, the government and regulatory bodies can ensure that India’s digital payments framework remains inclusive, competitive, and future-ready.
Balancing Growth with Security
The rapid growth of UPI has been one of India’s proudest technological milestones, contributing massively to the vision of a cashless and inclusive economy. However, as the system matures, balance between growth and systemic safety becomes crucial. Concentration risk can undermine years of progress if ignored.
Encouraging diversity among UPI platforms will not only reduce risks but also open the door for new, innovative payment solutions that can better serve varied consumer needs. With proper regulatory oversight and collaborative industry efforts, India can preserve UPI’s reliability while promoting healthy competition in its booming fintech space.
The Bottom Line
UPI’s dominance has undoubtedly propelled India to the forefront of global digital payments. Yet, its dependence on just two apps exposes a critical vulnerability that must be addressed. As experts warn, ensuring competition, innovation, and resilience will be the key to safeguarding India’s digital future — and maintaining the trust of millions who rely on UPI every single day.
