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Digital Payments Market (UPI) – Need for a Uniform Approach

Digital Payments Market (UPI) – Need for a Uniform Approach


India is a growing digital market. With a population of over 1.37 billion, the second most in the world and with over a 560 million internet users, it serves as a huge market for services related to the internet and it has opened up for multiple markets. Among them, the digitalisation of the finance sector and ease of payments through a unified platform in the form of UPI has created a huge market. With the market and its practices came concerns of anti-competitive and potential anti-competitive practices for which the CCI has taken contradictory stance. This paper shall first study the status of the UPI based Mobile Payments market to set context for the analysis of the orders regarding the same. Then the paper shall examine the inconsistency in connection with the aspect of tying in the digital market and conclude with the way ahead.


Mobile phones has become common parlance and of necessary utility in our everyday lives. This has led to the wide spread growth of multiple industries including the likes of Social media giants such as Facebook, Twitter and other platforms like Google, Apple etc. The mobile payments industry is one with the recent rapid growth following the availability of high speed-low cost internet services post 2016[1]Rajibinder Singh, Impact of Reliance JIO on Indian Telecom Industry: An Empirical Study, INT’L J. OF SCIENTIFIC RESEARCH AND MANAGEMENT, 2017 . This made way for a boom in smart phone consumption which in turn led to the increase in utilities that can be provided through a smart phone and the Mobile Payments industry is no exception.


The digitalisation of the payments market began as early as 2008 through the establishing of National Payments Corporation of India (Hereinafter referred as “NPCI”) which is an organisation established under the Payments and settlement Systems Act, 2007 specifically created for the purpose of promoting and regulating retail payments and settlement systems in our country. The NPCI was found by the Reserve Bank of India and the Indian banks Association as a not for Profit Company under the Companies Act of 1956.One of the goals of the organisation was to innovate and bring technology based solutions with respect to Banking and Retail transactions. The NPCI is primarily regulated by the RBI and the Ministry of Finance through the above-mentioned legislation.

The NPCI in 2016, created the Unified Payments Interface (UPI) wherein the bank accounts will be linked with an application making fund transfer through mobile phones much easier. The UPI made payments much quicker and accessible to people who had a smart phone with good internet connection. This interface was made available for third party to develop their applications. These third parties, which develop, are called Third Party Application Providers (TPAP) by NPCI through which they can provide services of the Payment System Participants (PSP’s) who are usually banks.

The UPI market since then has multiplied leaps and bounds, currently caters to a billion transactions and more per month, and even surpassed 2 billion transactions in October last year [2] According to the report released by Standard and Poor, the well-acclaimed rating organisation in July 2020 the industry, the volume of Mobile payments as compared to payments by cards increased by 163% and upto 287 billion US Dollars. The report also suggests, with the spread of the Pandemic that resulted in minimisation of cash transactions, the flow of the Mobile Payments market remained sufficiently resilient. Even when lockdown were released and Social distancing norms were to be widely followed, the scanning feature provided in UPI acted as a major source of expansion for the Companies. One of the primary reasons for success of the UPI networks is the facility and everyday utilities they provide. They allow people to pay for everyday necessities such as telecom, electricity, Gas, Insurance bills along with e-commerce transactions etc. through their platforms.


The major players, mostly Third Party Application Providers are Phone Pe which is owned by Flipkart (i.e. The Wal-Mart group), Google’s very own Google Pay, Pay-tm and Amazon Pay by the tech giant Amazon.
One of the most prominent e-commerce websites in India, Flipkart own the digital wallet Phone Pe since April 2016, after it was launched 2015. In 2016, Phone Pe also affiliated itself with YES Bank and they have been introducing new features together. Phone Pe uses the encrypted software from National Payments Corporation of India to enable the user to connect his/her bank account to the mobile. The first to adapt to the government backed Unified Payment Interface (UPI) platform, Phone Pe offers seamless digital transaction experience. This application hugely benefitted with the demonetisation of currencies in 2016 and Policy of the Government to push for cashless transactions.

Google Pay formerly known as Tez is an application used to make digital payments through the UPI platform. The application was introduced in September 2017 and was re-braded to its current form in August 2018. This move was after the organisation realised that the model in India was very successful and there was much demand for them to set-up their operations in other countries and at a large scale.

Amazon Pay is controlled by the large tech conglomerate. They began their operations in 2007 linking them with customer ids primarily created for the purpose of their e-commerce transactions. They began their operations in 2019 and are one of the fastest growing platforms particularly through the ability to mobilise their customers from the e-commerce platform. Their volume had increased multi fold (i.e. around 200%) and ended up with a 5% market share. Another crucial player in the Digital payments market is Paytm. However, they are currently granted a quasi-bank status by the RBI (Payments bank) thus, transactions through UPI is very minimal for the Indian giant who is one of the pioneers of the digital payment market in India.


As seen before, the players of the UPI based mobile Payments market is highly competitive in terms of market share and Phone Pe and Google Pay make up for the lion’s share of the market. As of August 2021, Phone Pe currently controls 45% of the UPI transactions with transactions upto 1.62 billion transactions amounting to 3.01 lakh crore rupees. Whereas Google Pay is closely second with 38% of the Market share improving from its 34% share from July, which amounted to 1.24 billion transactions worth Rs. 2.44 lakh crore rupees. Paytm despite their primary area of focus being their wallet service with a partial bank licence obtained from the RBI, it still has a market share of 8.8% dropping from the 14% it had in July. This market situation remains mostly the same with market share at times changing from Google-Pay to Phone Pe from time to time.
With the status of the market and its players, we shall now move onto the competition concerns in the Mobile payments market.


Despite being highly competitive on the face of it based on the market share, two cases have been brought before the Competition Commission of India for alleged and potential anti-competitive concerns. The first among them is the order with reference to the newly introduced WhatsApp Pay feature by the dominant messaging application WhatsApp which is owned by tech giant Facebook[3]Harshita Chawla v. WhatsApp Inc & Anr., Case No. 15 of 2020 vide order dated 18.08.2020. The second case is the order related to the anti-competitive concerns regarding Google Pay[4]XYZ v. Alphabet Inc., Case No. 07 of 2020 vide order dated 09.11.2020.

In this chapter, the paper shall analyse both the orders and check whether their approach is consistent with one another.


Informant Harshita Chawla approached the Competition Commission challenged the entry of WhatsApp into the UPI Mobile Payments market through its existing application as an additional feature. Her contentions can be broadly divided into two. They are-

• WhatsApp is a dominant player in the Internet based messaging applications for mobile phones. They are owned by Facebook, who also own Instagram who have the practice of buying their competition into a particular sector especially through their policy of target ads, which is their revenue model.
• WhatsApp using their dominance in the market for internet messaging applications bundle or tie their payments feature into their existing application, which would amount to an unfair imposition or coercion of the consumers into using their product. It is an abuse of dominant position thereby contravening Section 4(2)(a)(i), Section 4(2)(d) and Section 4(2)(e) of the Competition Act.
WhatsApp and Facebook responding to the information by the Informant respond as following-
• That the informant has no locus-standi to approach the commission based on the order of the NCLAT in Samir Agarwal v. Competition Commission of India as supposedly the informant is not a consumer/trade association nor has any legal injury to claim.
• It further contended that they form a much broader ‘market for user attention’ and competes with all digital products and does not fall within the category of market for internet based messaging apps itself.
• The primary contention against the abuse of dominance argument is that usage of the payment feature in the WhatsApp application is discretionary and can be set-up only after agreeing to it and registering. Against the argument of bundling WhatsApp reverts that it does not amount bundling as it is a mere additional feature to its existing system and there is no coercion to use the feature.
The Commission taking note of the contentions held that-
• The nature of the commission is inquisitorial, anyone can approach the commission for providing information, and the informant shall not necessarily be aggrieved to file information.
• The commission observed that the relevant market for WhatsApp shall be “Over the Top messaging application linked to a mobile number with a Smartphone. The second relevant market it identified as “UPI enabled Digital Payments App in India”.
• With regard to the questions of dominance and abuse of dominance, the commission did not find the argument as effective that a mere presence of the payment feature does not amount to coercion as it does not translate to actual usage of that specific feature/service. Concerning the bundling/tying argument, the Commission held that the tying product cannot create foreclosure/restriction of the market of the tied product’s market. The commission was of the view that due to the presence of existing players like Google Pay, Phone Pe, PayTM the chance of a foreclosure is not possible at the moment.


Anonymous information was provided to the CCI against Alphabet Inc, the parent company of Google with regard to the anti-competitive effects it has over its payments application, Google Pay in India. The submissions in the information were as follows-

• “Google was unfairly privileging Google Pay by prominent placement and search manipulation on the Play Store, which is the dominant app store on Android OS. Being factually unsubstantiated this was dismissed by the CCI.
• Pre-installation of Google Pay on Android Smartphones.
• Mandating third-party apps to use Play Store’s payment system and Google Play In-App billing for charging their users. Allegedly, this way Google ensures a commission of 30% per transaction, which is unfair.
• Imposing unfair terms on users by requiring them to use Google Pay, which does not comply with the data localization directive by the Reserve Bank of India and the guidelines issued by the National Payments Corporation of India (NPCI).
The CCI has found out that Google through its dominance in the market for supply of licensable operating system influenced the market for apps using UPI primarily through incentivising Smartphone producers to pre-install the application giving an advantage over the others. This though not was a mandatory addition in the Distribution agreement; Revenues would be shared for installing the application in their equipment. CCI however was of the view that there exists an unbalanced relationship with manufacturers of Smartphones and Google as it generally coerces them to have certain products like their search engine and browser. This whole process of pre-installation in their view of the commission can create as status-quo bias creating a sense of exclusivity and may disturb the level playing field, which deserves an investigation.


A comparison of the two orders by the Competition commission clearly reflects on the fallacies in them especially the inconsistency in their approaches. This is particularly true to the WhatsApp order where the idea of bundling and tying by the commission is particularly subject to scrutiny given the amount of principles on the subject matter. When examining on the issue the commission laid down the constituents of abuse of dominance in the case of tying as follows-

“The economic literature, as well as the decisions by other competition authorities, has laid down certain conditions which need to be fulfilled to conclude a case of tying. Such conditions are (i) the tying and tied products are two separate products; (ii) the entity concerned is dominant in the market for the tying product; (iii) the customers or consumer does not have a choice to only obtain the tying product without the tied product; and (iv) the tying is capable of restricting/foreclosing competition in the market.”

As seen earlier the Commission was of the opinion that the practice does not amount to tying as there was no coercion in using the two services together and that as per the current status of WhatsApp’s payment feature cannot/ is incapable of foreclosure of competition in India currently owing to the existing market scenario.

The commission’s application of tying and coercion is applicable to a largely brick and mortar market and with regard to a digital market like the instant one the threshold needs to be lower in comparison. The decision of the court of First instance of the European Union in the case of Microsoft v. Commission[5]Microsoft Corporation v. Commission, ECLI:EU:T:2007:289is an illustration why there needs to be a difference of threshold. Here the case arose when Microsoft has pre-installed (bundled) their Windows Media Player, which was held to be in contravention of Article 102 of TFEU. In the view of the Court, “coercion exists when a dominant undertaking deprives its customers of the realistic choice of buying the tying product without the tied product.” The commission agreeing that the existing players including Google Pay of having Status-quo bias, the view of the commission with regard to WhatsApp is very shortsighted. WhatsApp being an application which has been consistently the top apps to be downloaded in both Google Play store and App store for a few years [6] being an almost quintessential application in terms of messaging services the bias most likely shift once the feature is rolled out completely as the Consumer is incentivised to use them at a single place rather than installing a separate application for this purpose. This puts WhatsApp in a premium position and denying Consumers from using another application. The position it has taken is conflicting from the decision it took with regard to Google Pay, which demands further clarity and a need for uniformity on this regard.

The large consumer base that both organisations hold in their respective markets would mean creation of network effects in the market which it seeks to expand on. While the commission clearly notes down the possible network effects and how it positively affects Google Pay in its order, it fails to do so in the case of WhatsApp in the UPI payments market. Despite the absence of any real switching cost involved in the instant scenario, factors such as ease of shifting should be considered. This is contradicting the stance the commission had taken in its previous orders on this subject matter. The commission in Matrimony.Com v Google [7] Ltd. v. Google LLC, 2018 SCC Online CCI 1 the majority held that in digital platforms which have multiple uses, the network effects that they hold is much more evident and users who are new lean towards using a platform with an established user base and would shift less frequently. This is clearly possible from a position of dominance which is clear in the case of WhatsApp, but which the commission has failed to take into account.

A much more direct ratio was laid down in the case of Re Biocon Limited v. F. Hoffman-La Roche AG & Ors [8]Re Biocon Limited v. F. Hoffman-La Roche AG & Ors, 2017 SCC Online CCI 21. The Commission was of the view that even a partial denial of market access would amount to abuse of dominant position under Section 4(2)(C) of Competition Act, 2002 if it takes away the freedom to substitute, which can clearly happen in the case of WhatsApp Pay and its integration into the original application.


The digital sector is an ever changing and dynamic and the commission needs to keep up with the dynamism of the sector and should be better equipped to deal with such changes. The Commission’s orders with respect to both the scenarios clearly highlights the lack of adequate understanding of the digital market and the appreciable adverse effects they can bring which leads to inconsistent and non-uniform approaches even in the same market. Therefore, the Commission shall have to clarify its position vis-à-vis the market for UPI. However, a welcome step in the regulation of the Market, the NPCI the governing body of UPI has imposed a 30% limit to transaction volume of each UPI player, which should be complied by the end of 2022[9] . This will hopefully create a healthy competitive eco system and will not allow a single player to dominate the market.





4th Year, B.Com., LL.B (Hons), Tamil Nadu National Law University, Trichy



1 Rajibinder Singh, Impact of Reliance JIO on Indian Telecom Industry: An Empirical Study, INT’L J. OF SCIENTIFIC RESEARCH AND MANAGEMENT, 2017
3 Harshita Chawla v. WhatsApp Inc & Anr., Case No. 15 of 2020 vide order dated 18.08.2020
4 XYZ v. Alphabet Inc., Case No. 07 of 2020 vide order dated 09.11.2020
5 Microsoft Corporation v. Commission, ECLI:EU:T:2007:289
7 Ltd. v. Google LLC, 2018 SCC Online CCI 1
8 Re Biocon Limited v. F. Hoffman-La Roche AG & Ors, 2017 SCC Online CCI 21



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