NPCI Likely To Extend Deadline For UPI Market Share Cap By Up To Two Years: Report

The country introduced UPI in 2016, but it didn’t allow businesses to charge for the quick digital payment service.

Updated on: 10 May 2024 11:23 am

The National Payments Corporation of India (NPCI) might postpone imposing market share limitations on the Unified Payment Interface (UPI), as per a report by Reuters.

The year-end deadline for capping the market share of any entity processing payments via the UPI at 30 per cent will be extended by the NPCI by a maximum of two years, as per the report. As per the last statement by NPCI, the mandate was supposed to be implemented by December 2024. As of now, Phonepe has a share of 48.3 per cent in UPI payments; this increased from 37 per cent in April 2020. While the share of Google Pay has decreased to 44 per cent from 37.4 per cent,. As per data from April, the two together had 11.5 billion transactions.

The country introduced UPI in 2016, but it didn’t allow businesses to charge for the quick digital payment service. The goal was to encourage online transactions and decrease the use of cash. Because of this, WhatsApp, Amazon Pay, and several banks didn’t join UPI.

Now the risk is that there will be a concentration risk for only a few companies, like PhonePe with 48.9 percent market share, Google Pay with 37.7 percent, Paytm with 8.3 percent market share, and others.

PhonePe and Google Pay have been able to use their UPI customer base to provide services like loans and insurance, even though their applications do not profit from the payments.

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In 2020, the NPCI introduced a 30 percent market cap, as per the mandate of the central bank. While extending the deadline to 2024, the NPCI said in a statement, "Taking into account the present usage and future potential of UPI and other relevant factors, the timelines for compliance of existing TPAPs who are exceeding the volume cap are extended by two (2) years, i.e., until December 31, 2024, to comply with the volume cap.”

While speaking to Reuters, a source said that the deadline needs to be extended again as it won’t be possible to reduce the market share of Google Pay and PhonePe without hurting the payment growth of UPI.