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NPCI may defer market cap restriction for UPI platforms for 2 yrs: Report

NPCI may defer market cap restriction for UPI platforms for 2 yrs: Report

India Blooms News Service | @indiablooms | 09 May 2024, 10:06 pm

New Delhi: The National Payments Corporation of India (NPCI), responsible for managing the Unified Payments Interface (UPI), is likely to limit market share for digital payment platforms two years later, according to Reuters.

The deadline to put such a cap is only eight months away and NPCI is focussed on growth than concerns about market concentration.

This deferment will benefit big digital payment platforms in India like PhonePe and Google Pay, accounting for a total of 11.5 billion UPI transactions processed in April.

Amid the Paytm crisis, Phonepe's UPI market share soared to 48-49 percent in April, while Google Pay accounted for a 38 percent market share

Launched in 2016, UPI is a free instant digital payments service in India, aimed to bolster online transactions and diminish cash usage.

However, in the absence of revenue generation, players like Meta-owned WhatsApp and Amazon Pay have not been promoting UPI-based payments aggressively, raising concerns about market concentration, Reuters added.

Despite the inability to earn directly from payments,

PhonePe and Google Pay have been actively working to bolster their UPI customer base with additional services like loans and insurance.

With an initial 30 percent market share cap announced in 2020, NPCI had set the first deadline for two years, ending on the last day of 2024.

This deadline could impact UPI payments growth negatively as sudden market caps would limit users and disrupt business transactions on UPI apps.

NPCI had expected increase in the number of players but this did not happen owing to lack of scope of revenue generation.

Meanwhile, Paytm, which had the third position in the market, suffered a loss in processed payments after RBI’s regulatory restrictions.

Payment companies have requested NPCI to scrap the market-share limit and allow fees for UPI transactions to encourage competition. However, NPCI seems reluctant to lift the cap, preferring to further discuss the issue.

Recently, the Reserve Bank of India met with industry leaders to discuss ways to increase the UPI user base, which was around 300 million users and 50 million merchants by the end of last year, according to the most recent data available.

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