New Delhi: As the extended deadline of 30 per cent UPI market limit by NPC approaches, industry players are eagerly awaiting the implementation of measures to achieve the limit from January 1.
The National Payments Corporation of India (NPCI) extended the deadline for third-party UPI players to meet their 30 per cent volume cap on digital payment transactions in December 2022 by two years to December 2024.
Currently, third-party app providers (TPAPs) like Google Pay and Walmart' PhonePe account for 85 percent of UPI-based transactions. NPCI runs the Unified Payments Interface (UPI) which is used for real-time payments between peer to peer or merchants when making purchases.
According to sources, NPCI will outline ways to implement the 30 per cent UP market cap to reduce concentration risk.Sources said one option would be to stop onboarding new customers for those that have more than 30 per cent market share in UPI transactions, this could be done in a phased manner so that there is no impact on users.
Sources said it is expected that NPCI will give some clarity on this in the next few months much before the deadline so that any disruption can be avoided.
According to a senior banker, “When two players (Google Pay and Phone Pe) dominate such a large volume of activity, the risk of a single point of failure increases, resulting in disorganized services and disruption in services. "
Speaking on UPI concentration, Sanjeev Sharma, a senior lawyer specializing in competition laws, said big players invest heavily by predatory pricing to gain market majority.
Sharma said, “Once a monopoly is obtained these players monetize it by using its services to get back their investments with huge returns.This overall 'price game' reduces the space for innovation and makes it challenging for smaller players to provide services in a competitive perspective."
"Taking into account the current usage and future potential of UPI and other relevant factors, the timeline for compliance with the existing TPAP exceeding the volume cap is extended by two years i.e. till December 31, 2020 to comply with the volume cap. Is." NPCI had said in a circular.
NPCI had further said that given the significant potential of digital payments and the need for multifold penetration from its current status, it is imperative that other existing and new players (banks and non-banks) increase consumer access to it.Growth of UPI and achieving overall market balance
The National Payments Corporation of India (NPCI) extended the deadline for third-party UPI players to meet their 30 per cent volume cap on digital payment transactions in December 2022 by two years to December 2024.
Currently, third-party app providers (TPAPs) like Google Pay and Walmart' PhonePe account for 85 percent of UPI-based transactions. NPCI runs the Unified Payments Interface (UPI) which is used for real-time payments between peer to peer or merchants when making purchases.
According to sources, NPCI will outline ways to implement the 30 per cent UP market cap to reduce concentration risk.Sources said one option would be to stop onboarding new customers for those that have more than 30 per cent market share in UPI transactions, this could be done in a phased manner so that there is no impact on users.
Sources said it is expected that NPCI will give some clarity on this in the next few months much before the deadline so that any disruption can be avoided.
According to a senior banker, “When two players (Google Pay and Phone Pe) dominate such a large volume of activity, the risk of a single point of failure increases, resulting in disorganized services and disruption in services. "
Speaking on UPI concentration, Sanjeev Sharma, a senior lawyer specializing in competition laws, said big players invest heavily by predatory pricing to gain market majority.
Sharma said, “Once a monopoly is obtained these players monetize it by using its services to get back their investments with huge returns.This overall 'price game' reduces the space for innovation and makes it challenging for smaller players to provide services in a competitive perspective."
"Taking into account the current usage and future potential of UPI and other relevant factors, the timeline for compliance with the existing TPAP exceeding the volume cap is extended by two years i.e. till December 31, 2020 to comply with the volume cap. Is." NPCI had said in a circular.
NPCI had further said that given the significant potential of digital payments and the need for multifold penetration from its current status, it is imperative that other existing and new players (banks and non-banks) increase consumer access to it.Growth of UPI and achieving overall market balance