UPI has become one of the popular modes of digital payment in India. These services are provided by different apps, which are connected to the National Payments Corporation of India (NPCI) system in the backend. However, these apps might soon restrict you from making unlimited transactions. Here’s why?
In 2022, the NPCI proposed a 30 percent market share cap for UPI payment apps in order to control the dominance of a few players in the ecosystem. Existing players were given a two-year deadline to restrict their market share to the mentioned limit. However, the deadline for implementing the market cap was never met, and now the deadline to introduce the limit is December of this year.
What will happen now?
According to experts, the NPCI will review the UPI deadline by the end of this year and is most likely going to extend the deadline. It is also "highly unlikely" that either the Reserve Bank of India (RBI) or the Ministry of Finance will advise the NPCI to issue a circular to enforce the market cap. "Such a circular would likely face legal challenges and may not hold up in court," they said.
When reached, NPCI did not immediately comment.
For the month of April, PhonePe led the UPI market with close to 49 percent share across P2M (person to merchant) and P2P (person to person) transactions. The company has maintained the top position in UPI transactions since November 2020. On the other hand, Google Pay clocked 38 percent UPI market share in April. Paytm’s market share in the UPI ecosystem came down to 8.4 percent in April, a third consecutive drop for the fintech major every month.
Meanwhile, the National Payments Corporation of India (NPCI) recently launched a new venture called NPCI International Payments Limited (NIPL), which has partnered with the Bank of Namibia (BoN). NIPL will assist BoN in developing a payment system similar to India's Unified Payments Interface (UPI). This partnership aims to help Namibia modernize its financial ecosystem by improving accessibility, affordability, and connectivity with both domestic and international payment networks, as well as interoperability. The UPI technology and experience from India will be utilized to achieve this goal.
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Inputs from IANS
