Seven UPI ecosystem players have jointly written to the National Payments Corporation of India (NPCI), asking to "reconsider" its proposed UPI Meta/Checkout framework.

In a detailed joint representation, seen by The Head and Tale, Paytm, Navi, Cred, BharatPe, Super Money, Kiwi and FamPay have raised concerns around competition, customer choice, market concentration, security, transaction success rates and operational complexity, while requesting NPCI to undertake broader consultations with TPAPs and other ecosystem participants before progressing with the proposed framework. 

According to the letter, the proposal "does not deliver sufficiently compelling incremental customer benefits to justify the significant ecosystem, competitive, operational, and architectural implications associated with its implementation."

"While we appreciate NPCI's continued efforts towards enhancing customer experience and strengthening UPI's competitiveness amidst the evolving digital payments landscape, we are unable to support the proposed UPI Meta framework," the companies jointly said.

The letter, dated July 23, represents the most formal industry objection since NPCI revived the project earlier this year.

As The Head and Tale had first reported in May, Project UPI Meta was originally conceived nearly one-and-a-half years ago before facing strong resistance from payment companies and eventually being pushed into the background. The proposal resurfaced earlier this year when NPCI revived discussions around what is now formally referred to as the UPI Checkout Protocol and circulated a draft specification among banks, third-party application providers (TPAPs) and payment aggregators for feedback.

The proposal seeks to allow merchants to let customers link their preferred UPI app and payment instruments directly at checkout. Once linked, customers would be able to view their bank accounts and other supported UPI payment instruments on subsequent visits before proceeding directly to PIN or biometric authentication.

However, the companies – in the letter – said that the proposal introduces "significant changes to the existing UPI architecture and payment journey without adequately addressing a demonstrated customer problem."

In April, a Moneycontrol report stated that expected launch of Apple Pay in India led to the UPI Meta framework. While the companies acknowledge that the proposal seeks to make UPI checkout as seamless as tokenised card payments such as Apple Pay, they argue that the comparison itself is misplaced.

According to the letter, the underlying customer problem being addressed is fundamentally different. "Unlike cards, where tokenisation eliminated the need for customers to repeatedly enter card numbers, expiry dates and CVV details, UPI already provides a highly streamlined and interoperable payment experience where users are not required to repeatedly remember or enter payment credentials.”

"Accordingly, replicating checkout models designed for closed payment ecosystems may not necessarily deliver comparable customer benefits within UPI's open, interoperable architecture," it adds.

"More importantly, 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 representation states. "In the absence of a clearly established problem statement, introducing a structural change of this nature may create disproportionate ecosystem impact relative to the customer benefit achieved."

The companies said that the framework "shifts customer choice of TPAP from a decision that can be exercised at every transaction to a preference established during the initial onboarding or setup process."

"Default preferences established during onboarding tend to persist unless customers have a specific reason to change them," it says, adding that "the TPAP selected during onboarding may become the default application for a substantial proportion of future transactions." 

According to the companies, 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 representation further argues that the proposal may gradually shift customer behaviour from active application selection to default routing, thereby reducing competitive opportunities at the point of payment.

It also warns that reduced competition at checkout may also diminish incentives for TPAPs to continuously invest in improving transaction success rates, customer experience, fraud prevention capabilities and adoption of newer payment instruments, including UPI Circle, Credit Cards on UPI, Credit Lines on UPI and UPI Lite. 

The companies further argues that the framework is likely to accelerate concentration of transaction share amongst a limited set of incumbent TPAPs and may undermine the competitive neutrality that has been instrumental to UPI's growth. 

Such an outcome "is also inconsistent with the intent underlying NPCI's market share cap framework and broader ecosystem objectives," the companies added.

PhonePe and Google Pay hold a combined UPI market share of about 80% in terms of payments volume.

The concerns mirror those raised when Project UPI Meta first surfaced more than a year ago, as exclusively reported by The Head and Tale. At the time, several smaller payment companies privately argued that allowing customers to establish persistent relationships with a preferred UPI application at the merchant checkout could disproportionately benefit the largest UPI apps because users rarely change default payment preferences once they are set.

The companies have also questioned the governance framework around sharing customer payment instruments across multiple participants.

While the proposal envisages payment instruments being shared only after explicit customer consent, the representation says that the broader governance, security, liability, and operational accountability implications associated with merchant-side retrieval, display, and management of such information may require "deeper evaluation."

It adds that clear responsibility would need to be established for stale payment instrument information, synchronisation failures, incorrect account display, consent mismatches and customer disputes before the framework is implemented. 

The representation also argues that the proposal could dilute several functions currently performed by UPI applications during checkout, including displaying issuer bank health, enabling dynamic account selection, balance enquiries, fraud prevention interventions and customer education around newer UPI products.

"The proposed framework effectively shifts UPI towards a default routing model, where payment initiation becomes increasingly detached from the TPAP experience. We believe this represents a fundamental departure from the existing UPI architecture, where TPAPs actively contribute to transaction success, customer protection, innovation, and ecosystem growth." 

NPCI, Paytm, Navi, BharatPe, Cred, Kiwi, Super Money are yet to respond to The Head and Tale queries.