The National Payments Corporation of India (NPCI), under whose supervision runs the UPI digital payment, is in talks with the Reserve Bank on the execution of its proposed December 31 deadline for limiting the volume cap of payment players to 30 per cent.
The move will certainly reduce the market share of third-party app providers (TPAP). Riding high on the no volume cap, two players – Google Pay and PhonePe – alone account for a market share of about 80 per cent.
NPCI in November 2022 had proposed a 30 per cent volume cap for third-party app providers in a bid to avoid concentration. Consequently, sources said that a meeting was convened to comprehensively look at all aspects. Apart from NPCI officials, senior officials of the finance ministry and RBI also participated in this.
Meanwhile, NPCI is making in depth evaluations of all the possibilities and no final decision has been taken to extend the December 31 deadline, the sources said. NPCI is contemplating to take a call on the UPI market cap implementation by November end, sources said.
NPCI in 2020 came up with a directive to cap the share of transactions of third-party application providers. It was said that TPAP could process at 30 per cent of the volume of transactions handled on UPI, effective January 1, 2021, which is to be calculated on the basis of the volume of transactions processed during the preceding three months.
However, the existing TPAPs such as PhonePe and Google Pay were given two years more to comply with the orders.
Meanwhile, NPCI has also received representations from industry stakeholders to extend the deadline and they are being examined, they added.