UPI Meta: Can Convenience Coexist with Competition?

Every Unified Payments Interface (UPI) payment today begins with a choice. Merchants offer a common UPI payment option, while customers choose whether to pay through PhonePe, Google Pay, Paytm or another Third-Party Application Provider (TPAP). This model has helped UPI become the world's largest real-time retail payment system. Now, National Payments Corporation of India (NPCI) wants to make payments even simpler.

Under the proposed UPI Meta protocol, users would set a preferred UPI app just once, allowing merchants to invoke it automatically for future payments. The objective is to reduce checkout friction and make payments faster.

The proposal, however, has met resistance from within the fintech ecosystem. Seven companies - Paytm, BharatPe, CRED, Navi, Kiwi, FamPay and Super.money - have urged NPCI to reconsider the framework, arguing that persistent default settings could reduce consumer choice and strengthen the market position of already dominant players.

The concern is not merely about technology but about market structure. With PhonePe and Google Pay accounting for roughly 80% of UPI transactions, according to media reports, critics fear default settings could further entrench their dominance.

India is hardly the first jurisdiction to confront the competitive implications of default settings. In the European Commission's Android case, Google was found to have reinforced its market dominance through pre-installation and default status, while Microsoft's Browser Choice commitments recognised that preserving competition required active user choice.

Both cases reflected a well-established behavioural reality: users seldom change defaults. Competition law therefore increasingly scrutinises interface design, not merely contractual restrictions, as a source of market power.

UPI Meta, however, is different. NPCI is neither prescribing a default application nor favouring any TPAP; users would choose their own.

The real legal question is whether the operator of India's digital public infrastructure owes a heightened duty of competitive neutrality when redesigning how millions of users access payment services.

That question formed the basis of LawBeat's discussions with Suhail Nathani, Managing Partner at Economic Laws Practice, and Ram Kumar Poornachandran, Senior Partner at AZB & Partners. While both agree that preserving competition remains central to the legal analysis, they approach NPCI's obligations from markedly different starting points.

For Nathani, competitive neutrality is inherent to any payment infrastructure built around consumer welfare. He argues that NPCI's responsibility arises not merely because it facilitates UPI transactions but because it operates critical payment infrastructure under the Reserve Bank of India's oversight. NPCI's governance structure, RBI's supervisory powers under the Payment and Settlement Systems Act, 2007, and even its own decision to introduce a 30% TPAP market share cap reflect an institutional commitment to preventing excessive concentration in the UPI ecosystem.

Poornachandran, however, begins a step earlier. Before any duty of competitive neutrality can arise, he says, the Competition Commission of India would first have to determine whether NPCI qualifies as an "enterprise" under Section 2(h) of the Competition Act, 2002. That question, he notes, remains untested.

If NPCI is treated as an enterprise performing economic functions rather than purely regulatory ones, and if it is found to occupy a dominant position in an essential payment network, Section 4 of the Competition Act would impose a special responsibility not to distort competition, Poornachandran says.

The proposal also raises a broader question: does allowing users to set a persistent default UPI app fundamentally alter consumer choice? Here too, both experts agree that defaults are not inherently unlawful, but they differ on when regulatory intervention becomes necessary.

Nathani cautions against treating every default setting as benign. In his view, the legality of UPI Meta will depend on how the feature is implemented rather than on the feature itself. If users freely choose their preferred app, can change it easily, and are presented with clear and transparent options, the proposal is unlikely to undermine consumer choice. However, he says the assessment would change if the interface deploys "dark patterns", conceals alternatives, or makes switching cumbersome. In such circumstances, the design could attract scrutiny under Sections 3 and 4 of the Competition Act for producing exclusionary effects.

Poornachandran reaches a similar conclusion through a competition law lens. He notes that concerns in cases such as Google Android arose because consumers were effectively locked into defaults that were difficult to avoid. UPI Meta, as currently proposed, is materially different. It neither mandates a particular TPAP nor allows merchants or NPCI to choose one on the user's behalf. The default is user-selected, optional and reversible. So long as those features remain intact, he says, it would be difficult to characterise the proposal as exclusionary under Section 4.

The more difficult question is whether competition concerns should outweigh the efficiency gains NPCI seeks to achieve. Competition law has long recognised that innovation and consumer welfare are legitimate objectives alongside preserving market rivalry.

Nathani points to Section 19(3) of the Competition Act, which expressly requires the Competition Commission of India to consider factors such as consumer benefits, improvements in distribution and technological development while assessing competitive effects. Faster checkout and reduced payment friction are therefore legitimate objectives. However, he argues that these gains should be accompanied by safeguards such as affirmative user selection, neutral presentation of eligible payment apps, an easily accessible option to switch defaults, and continued monitoring of market concentration.

Poornachandran goes further. He argues that this balancing exercise arises only after actual competitive harm has been established. Based on the proposal currently available, he finds no evidence that UPI Meta forecloses rival TPAPs or favours any particular payment app.

Instead, he describes UPI Meta as a TPAP-neutral, user-directed design that improves convenience without distorting competition. He cautions, however, that the assessment could change if future iterations make switching difficult or allow one app to become entrenched through design rather than user preference.

He also identifies an unresolved policy question: if UPI Meta ultimately causes a TPAP to exceed NPCI's proposed 30% market-share cap, how should the regulator reconcile consumer choice with its own concentration limits?

The legal debate surrounding UPI Meta is therefore less about whether default settings are inherently anti-competitive and more about how a digital public infrastructure should exercise its power to shape user behaviour.

The proposal sits at the intersection of innovation, consumer welfare and competition policy. If the protocol remains genuinely user-driven, TPAP-neutral and easy to reverse, it may well survive competition law scrutiny. But if implementation creates stickiness, reinforces market concentration or weakens meaningful consumer choice, the very design intended to simplify digital payments could invite regulatory intervention.