NPCI To Cap Transaction Volumes For UPI Apps At 30% From Jan 1

In a move that is likely to impact PhonePe and Google Pay which have market share higher than 30%, the National Payment Corporation of India (NPCI), which manages Unified Payment Interface (UPI), has decided to cap the share of the total number of transactions that a third party application can process at 30% of the total volume of transactions processed in UPI. 

The decision will come into effect from January 1, 2021.

With UPI reaching 2 billion transactions a month and with potential for future growth, it has issued a cap of 30% of the total volume of transactions processed in UPI, applicable on all Third Party App Providers (TPAPs),” NPCI said in a statement.

NPCI has said, the cap of 30% will be calculated basis the total volume of transactions processed in UPI during the preceding three months (on a rolling basis). And, the existing TPAPs, which have exceeded the cap, will have a period of two years from January 2021, to comply with the same in a phased manner.

Currently, third party applications such as PhonePe, Google Pay, Paytm and Amazon Pay, dominate the UPI ecosystem, controlling a majority of the transactions. According to industry estimates, the biggest player is Google Pay with over a 40% market share, closely followed by PhonePe.

UPI recorded over 2 Bn transactions in October, a milestone that highlights the faster adoption of digital payments in a pandemic-hit world. 

As businesses open up, there is a huge uptick in UPI payments as an increasing number of customers opt for digital payments, owing to convenience and safety. With the festive season in full bloom, October has seen a surge in UPI payments.

The cap will be calculated on the basis of the total volume of transactions processed in UPI during the preceding three months on a rolling basis.

Existing app providers with more market share of more than 30% market share will have two years from January 2021 to comply with the latest developments.