UPI Payment Apps: A Transaction Cap Is Likely to Be Imposed
It looks that consumers in India may soon lose the ability to make an unlimited number of transactions using Google Pay and other payment apps that use the Unified Payments Interface (UPI). According to a report from ANI, the Reserve Bank is working with the National Payments Corporation of India (NPCI), which is in charge of the UPI digital system, to implement its recommended December 31 deadline for decreasing the volume cap for third-party app providers (TPAP).
Unified Payments Interface
- Product type – Instant real-time inter-bank payment system
- Owner – National Payments Corporation of India
- Produced by – National Payments Corporation of India
- Country – India
- Introduced 11 April 2016; 6 years ago
- Markets – India, Bhutan, Nepal, Malaysia, Singapore, United Arab Emirates, France, Oman, European Union, International by cross border payment agreements
Google Pay and PhonePe currently have an 80 percent share of the market. In November of this year, NPCI requested a 30 percent volume cap from the RBI in order to lessen the risk of concentration. There are currently no transaction restrictions for UPI-based applications like Google Pay, PhonePe, and Paytm.
After the proposal, it was said that a meeting was conducted to “comprehensively look at all the aspects.” Senior representatives from the RBI and the finance ministry were also present at the meeting in addition to NPCI officials. There hasn’t been a decision made about this as of yet.
It is currently being looked into whether some business stakeholders want NCPI to extend the deadline. There are rumours that the implementation problem with UPI market cap would be fixed before the end of this month.
However, the projected market cap was later exceeded and the UPI apps were given at least two more years to comply with the mandate. NCPI initially presented the same proposal to cap the volume of transactions at 30% in 2020.
At this moment, there is no information on the probability of a deadline extension. Rumor has it that PhonePe has already requested an extension of the December 31 deadline for at least three years, and some other players seek a five-year extension. We’ll know more before the end of November, hopefully.