The National Payments Corporation of India, commonly known as NPCI has reportedly postponed the enforcement of market share caps for Unified Payments Interface (UPI) payment apps, extending it by two years, moving the deadline to December 2026. This decision comes as a relief for leading players like PhonePe and Google Pay, which have dominated the Indian UPI ecosystem.
Why the market cap rule was introduced
First proposed in 2020, the market cap aimed to restrict any single UPI payment app to a 30% share to foster competition and prevent monopolies. However, current statistics show that PhonePe holds a 47.8 per cent market share, while Google Pay accounts for 37 per cent. Implementing the cap now could have disrupted the operations of these platforms, which cater to millions of users.
Strategic move to stabilize the UPI ecosystem
By extending the deadline, the NPCI aims to balance market dominance with the need for innovation and growth. This decision also provides emerging players more time to build their presence in the competitive fintech landscape.
In addition, the NPCI has lifted the 100 million user cap on WhatsApp Pay, allowing the Meta-owned platform to expand its reach and compete more effectively in India’s booming digital payments sector.
UPI's remarkable growth in India
UPI has seen explosive growth, with transaction volumes soaring by 46% in 2024 to reach 172 billion, compared to 118 billion in 2023. This rapid adoption underscores UPI’s pivotal role in India's digital economy and highlights the need for thoughtful regulatory changes.
What’s next for UPI apps?
With the new deadline, leading apps like PhonePe and Google Pay have time to adapt and diversify their services. The delay also encourages collaboration between established and emerging players, potentially resulting in better services for consumers.
As the UPI ecosystem continues to evolve, this extension could pave the way for a more balanced and competitive market, ensuring long-term stability and innovation in India’s digital payment sector.
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