NPCI extends UPI market cap deadline by two years

The National Payments Corporation of India has extended the deadline for UPI players to adhere to a market cap of 30 percent by two years to December 31, 2024, from the previous deadline of December 31, 2022, after which all players would have to have a share of 30 percent or less in monthly UPI volumes.

Currently, three players - PhonePe, Google Pay, and Paytm - account for approximately 96 percent of monthly UPI volumes.

“In view of the significant potential of digital payments and the need for multi-fold penetration from its current state, it is imperative that other existing and new players (banks and non-banks) shall scale-up their consumer outreach for the growth of UPI and achieve overall market equilibrium,” the NPCI circular says.

The earlier deadline set by NPCI was December 31, 2022, after which all players would have to have a share of 30 percent or less in monthly UPI volumes. According to the most recent NPCI app-wise data, PhonePe had a 47 percent market share in volume for the month of October. Google Pay accounted for 34 percent of total volume in the month, while Paytm accounted for 15 percent.

"We are obviously relieved to see the UPI market share cap get extended by two years. Even when the market share cap was announced in November 2020, we had repeatedly protested the idea because there is no way for any market participant to reduce their own market share without actively denying service to the end customer," said Sameer Nigam, founder and CEO of PhonePe.

There are other players such as Amazon Pay, WhatsApp Pay, and others currently have a negligible share because users have chosen to stick with one of the top three UPI apps.