The National Payments Corporation of India has set a30% cap on the total volume of UPI payments which are processed by Third-Party Application providers, which will come into place from next year’s January. The Unified Payments Interface has crossed 2 billion payments, as per the NPCI, with TPAs such as Google Pay and PhonePe accounting for most of this figure. Currently, the NPCI has put a cap on the number of payments that a single company can process, to address the dangers and defend the UPI ecosystem as it further scales up. This will mainly affect Google Pay and PhonePe, and introduce a chance for other payment apps like Paytm and MobiKwik. There are also concerns that by capping the no. of payments a firm can do in 30-31 days, it may result in getting big failure rates of payments.
The UPI ecosystem is deeply subjugated by just 2 firms, these are Google Pay and PhonePe. As per a current report, both the firms account for approx. 40% of the number of payments each. Besides this, 2 firms, Paytm and MobiKwik make approx. 20% of the UPI transactions. All other applications, ranging from the BHIM UPI application to several bank applications, hardly have any share.
Image from NPCI
With this latest rule, the firms will see their share change. 30% percent cap will be calculated based on the total volume of payments made in UPI during the previous 3 months on a rolling basis. As per the statement, the TPAs that have more than a 30% share will have a 2-yr period to obey in a phased way.
It’s not lucid what will occur if a firm hits a cap if it would be permitted to carry out additional payments then, or if it would have to halt. This means that if a user is using a popular TPA such as Google Pay or PhonePe, would this result in more failed payments? At present-day, this is not positive. WhatsApp is another candidate in this space that has been waiting in the wings for permissions, and it has now been permitted by the NPCI to go ahead with its rollout.