The National Payments Corporation of India (NPCI) on Friday extended the deadline for third-party app providers (TPAPs) in Unified Payments Interface (UPI) to limit the market cap by 30 percent by two years to December 31, 2024.
"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, is extended by two (2) years i.e. till December 31, 2024 to comply with the volume cap," NPCI said in a circular.
"In view of significant potential of digital payments and the need for multi-fold penetration from its current state, it is imperative 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," the statement added.
The move by NPCI brings relief for the TPAPs as PhonePe and Google Pay which share over 30 percent market share.
CEO and Founder of PhonePe, Sameer Nigam said the new NPCI circular acknowledges that the burden is on other existing and new UPI players to ínvest more time, effort and money to increase their own UPI market share.
"We are obviously relieved to see the UPI market share cap get extended by two years. Even when the market share cap was announced in Nov 2020, we had repeatedly protested the idea because there is no way for any market participant to reduce their own market share without actively denying service to the end customer. At PhonePe's scale, to reduce our UPI market share to 30 percent we would be forced to deny UPI payment services to crores of Indians, and that would be totally detrimental to the incredible Indian digital payments growth story over recent years."
"The new NPCI circular itself acknowledges that the burden is on other existing and new UPI players to ínvest more time, effort and money to increase their own UPI market share. Failing that, the organic market share of participants in the UPI industry will not change significantly, and NPCI will have to keep extending the market cap indefinitely. This constant uncertainty is not helpful for anyone in the entire UPI ecosystem - incumbents or challengers."
In November 2020, NPCI issued a cap of 30 percent of the total volume of transactions processed in UPI transactions for Third Party App Providers (TRAPs). The motive behind the move was to address risks and protect the growing UPI ecosystem, effective January 1, 2021, it said.
However, existing TPAPs- PhonePe and Google Pay were given two years more to comply with the orders, since both the UPI-based transactions app have a market share higher than 30 percent.
(Edited by : Anushka Sharma)
