NPCI Mulling Raising UPI Market Share Limit To Over 40%

The National Payments Corporation of India (NPCI) is reportedly considering raising the market share cap for Unified Payments Interface (UPI) apps from the proposed 30%,.

Citing sources, TechCrunch reported that the NPCI is mulling allowing UPI third-party apps to hold more than 40% market share. 

This comes amid reports that new entrants to the UPI ecosystem were informed that the previously proposed 30% market share cap may not be enforced, causing many new players to delay investments as they awaited clarity.

To limit the dominance of major digital payments players like Google Pay and PhonePe, the NPCI first proposed a 30% market cap for third-party app providers in November 2020, with the deadline extended from December 2022 to December 2024.

However, in May, it was reported that the NPCI was planning to extend the year-end deadline by up to two years to cap the market share at 30%. 

It is pertinent to note that the total transactions processed by UPI surpassed 100 Bn last year.

Meanwhile, fintech giants PhonePe and Google Pay continue to dominate the UPI ecosystem with a 48.4% and 37.3% market share, respectively, as of August. 

Recently, a parliamentary panel also flagged the dominance of global fintech apps in the Indian digital payments ecosystem.

Amid these, PhonePe founder and CEO Sameer Nigam last month cited the NPCI’s decision to cap market share as one of the reasons hindering the company’s IPO. 

Despite this, PhonePe and Google Pay continue to launch new features. PhonePe recently launched a credit line on UPI, while Google Pay unveiled UPI Circle – a service that allows users to make online payments without linking their bank accounts. 

The latest development comes at a time when the Indian government is pitching the UPI to the world. In July, NPCI launched the ‘UPI One World’ wallet to facilitate payments for foreign tourists. 

India also inked a deal with the Maldives to extend UPI services to the island nation, and discussions are underway to integrate UPI with Malaysia’s PayNet.

In addition, India’s IT minister Ashwini Vaishnaw said last year that the country has signed memoranda of understanding (MoUs) with around 30 nations to expand UPI internationally. 

NPCI’s global arm, NPCI International Payments Limited (NIPL), has also signed a deal with the Bank of Namibia to develop a UPI-style digital payments system for Namibia.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.