India Fintech Foundation flags UPI concentration risk to Finance Ministry, RBI
The industry body stated that more than 80 percent of the total transaction volume on UPI is processed by just two third-party app providers (TPAPs).
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The India Fintech Foundation (IFF) has warned the Ministry of Finance and the Reserve Bank of India (RBI) about systemic concentration risk within the Unified Payments Interface (UPI) ecosystem.
In an October 29, 2025, letter, the industry body stated that more than 80 percent of the total transaction volume on UPI is processed by just two third-party app providers (TPAPs).
Key Metrics:
September 2025: UPI processed 19.63 billion transactions valued at approximately Rs 24.90 lakh crore.
August 2025: Volume reached a record 20.008 billion transactions worth Rs 24.85 lakh crore.
The IFF has proposed major changes to the government's incentive scheme for UPI and RuPay debit-card transactions.
Recommendations include:
Rewiring the incentive mechanism to ensure other TPAPs receive a greater share of UPI incentives.
Introducing a cap on incentive flows: The UPI incentive scheme to banks should be capped at 10 percent per TPAP they support. This action would incentivize banks to diversify partnerships.
The foundation noted the current structure "adds to the systemic risk" in India's largest payment system. The IFF also urged policymakers to view UPI concentration through a strategic and geopolitical lens, emphasizing the need for UPI to remain resilient against risks.
The high volume of nearly 20 billion transactions per month processed by only two apps raises concerns about stifled innovation, systemic fragility, fair access, and competition, according to the letter.
