Seven Indian fintechs warn NPCI's UPI Meta protocol risks competition

Seven of India's leading fintech players — Paytm, Navi, CRED, Super Money, Kiwi, BharatPe and FamPay — have jointly written to the National Payments Corporation of India (NPCI), submitting that its proposed "UPI Meta" checkout protocol could kill the very competition it claims to enhance. In a strongly worded joint representation seen by ET, the companies warn that the framework risks locking customers into a single default payment app chosen at onboarding, rather than letting them actively choose at every transaction. The third-party application providers (TPAPs) have requested NPCI to undertake broader consultation before progressing with the proposed framework.

"In our view, the proposed framework risks altering these foundational characteristics without addressing a clearly established ecosystem problem or unlocking meaningful incremental customer value. We therefore respectfully request NPCI to undertake broader consultation with TPAPs and other ecosystem participants and comprehensively evaluate the concerns highlighted above before progressing with the proposed framework," the letter addressed to Nalin Bansal, Chief Relationship Management (Partnerships & Central Government), NPCI, reads.

NPCI did not respond to a request for comment.

While acknowledging NPCI's continued efforts to enhance customer experience and strengthen UPI's competitiveness amid the evolving digital payments landscape, the TPAPs said they were unable to support the proposed UPI Meta framework in its current form.

According to the letter, the framework introduces significant changes to the existing UPI architecture and payment journey without adequately addressing a demonstrated customer problem. It further has the potential to adversely impact competition, innovation, transaction success optimisation and ecosystem neutrality — principles the signatories describe as fundamental to UPI's success and widespread adoption.

UPI Meta — often referred to as UPI Checkout — acts as a higher-level framework sitting above standard UPI apps. Developed by NPCI, it functions as a tokenisation and data-storage layer that allows users to save a preferred UPI handle directly on merchant websites and apps for fast, one-click checkouts.

The signatories argue that UPI Meta models card-tokenization checkout experiences such as Apple Pay, but those solved the real pain point of repeatedly entering card details. UPI, they say, doesn't have that problem; it is already a streamlined, credential-free experience. Despite UPI processing billions of transactions monthly, no data has been presented showing that customers are dropping off due to the current checkout flow.

"Despite UPI processing billions of transactions every month and continuing to witness strong growth, no ecosystem-wide evidence has been presented to demonstrate that the current checkout journey is causing material customer drop-offs or transaction abandonment," the letter states.

Their biggest concern, however, is market concentration. Today, customers actively pick their TPAP at every transaction. Under UPI Meta, a TPAP would instead be set as a "default" during onboarding and behavioural data shows people rarely change defaults once set, companies argue. Over time, this could allow a few large incumbents to permanently dominate transaction share, while smaller and newer apps lose the ability to win customers transaction by transaction. The signatories say this runs counter to NPCI's own market-share-cap policy, which was designed to prevent exactly this kind of concentration.

"Over time, this may create structural advantages for larger incumbent TPAPs with significant existing customer bases, while making customer acquisition and transaction share growth increasingly challenging for smaller and emerging TPAPs," the letter states.