The deadline to adhere to the National Payments Corporation of India’s (NPCI) 30% market share cap on platforms using the Unified Payments Interface has been extended by two years (UPI). The decision is viewed as a huge relief for Google Pay and PhonePe, which are now in control of the majority of the UPI market share and are supported by Walmart and Flipkart respectively.
The market cap restrictions were supposed to go into effect in January 2021, according to NPCI, and would prevent any one payments app from processing more than 30% of UPI transactions in a given month. However, the organisation has subsequently postponed the deadline a number of times.
It again extended the deadline, this time to December 31, 2024, in a circular released on Friday, “taking into account the present usage and future potential of UPI and other pertinent circumstances.”
The NPCI circular stated that “other existing and new players (banks and non-banks) shall scale-up their consumer outreach for the growth of UPI and achieve overall market equilibrium in view of the significant potential of digital payments and the need for multi-fold penetration from its current state.”
Industry observers think the decision will give PhonePe and Google Pay, which together account for more than 80% of UPI’s market share, a boost. However, the extension can be viewed as a natural setback for services like Paytm and WhatsApp Pay. In terms of UPI market share as of October, Paytm held a 15% share. Comparatively, GooglePay accounted for about 35% of the market, while PhonePe held a 47% share.
“It goes without saying that we are relieved that the UPI market share cap has been extended by two years. According to Sameer Nigam, CEO and creator of PhonePe, “To limit our UPI market share to 30% would require us to refuse UPI payment services to crores of Indians, which would be utterly damaging to the wonderful success narrative of Indian digital payments.”
The new regulatory circular “acknowledges that the burden is on other existing and new UPI operators to devote more time, effort, and money to enhance their own UPI market share,” the speaker continued.
The UPI transaction value for the month of November came in at Rs 11.90 lakh crore after reaching a new high of Rs 12.11 lakh crore in October. The number of transactions, which stood at 7.3 billion in October, did not change in November.
In accordance with the Reserve Bank of India’s Payment Vision 2025, UPI is anticipated to grow by 50% on average annually.
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