PhonePe & GPay: The Duopoly That May Not Last Forever

Niti

• 2 min read
PhonePe & GPay: The Duopoly That May Not Last Forever

For years, two apps have defined India’s digital payments story — PhonePe and Google Pay. Together, they transformed how over a billion people move money, splitting bills, paying merchants, and sending cash across the country with just a tap.

But while their dominance looks unshakable on the surface, cracks are beginning to appear.

The Numbers Speak

As of August 2025, the duopoly controls a massive 81% market share:

  • PhonePe: 45.7% share → 9.15 billion monthly transactions, worth ₹11.99 lakh crore.
  • Google Pay: 35.3% share → 7.06 billion monthly transactions, worth ₹8.83 lakh crore.

Together, that’s 16.2 billion monthly transactions — more than the next eight competitors combined.

This sheer scale is what makes them look invincible.

How They Built the Fortress

Their rise wasn’t just timing — it was a combination of network, regulation, and scale:

  • 🧲 Network Effects: Once your friends or merchants started using GPay or PhonePe, you were almost forced to follow. Payments thrive on ubiquity, and they hit critical mass first.
  • 🔐 Regulatory Tailwinds: NPCI’s 30% market share cap kept getting postponed (currently extended until December 2026), giving them extra time to consolidate.
  • 🌐 Scale Advantage: At 16B+ monthly transactions, their systems enjoy cost efficiencies and fraud defenses others can’t replicate.

It’s not just a moat. It’s a fortress.

But the Fortress Isn’t Impenetrable

Go back to January 2024. At that point, PhonePe and GPay together held 95% of UPI transactions. Fast forward to July 2025, and that’s down to 88.3%.

Still dominant, but slipping.

Why?

  • The UPI market itself is exploding — now 20B+ transactions a month, growing at 35% YoY. That expansion leaves room for challengers to wedge in.
  • Regulatory pressure is mounting. NPCI doesn’t want India’s entire financial plumbing dependent on just two players. Diversification is no longer optional.

The Inevitable Shift

Duopolies don’t last forever. Even giants with near-total market control eventually face erosion — whether from regulators, innovators, or shifting consumer habits.

PhonePe and GPay may look untouchable today. But the next wave of challengers — from CRED to WhatsApp Pay to Super.money — are planting seeds for tomorrow.

Because in a market growing this fast, even a small slice of the pie is worth billions.

👉 The takeaway: The kings of UPI aren’t falling yet. But the cracks in their crown are beginning to show.