UPI Transactions On Google Pay, Paytm, PhonePe Will Be Capped; How Will It Impact You?

UPI Transactions On Google Pay, Paytm, PhonePe Will Be Capped; How Will It Impact You?
UPI Transactions On Google Pay, Paytm, PhonePe Will Be Capped; How Will It Impact You?

National Payments Corp. of India (NPCI), the creator and governing body of UPI has shocked leading payment apps in India by declaring that the transactions will be capped for all.

How will it impact you, as the end-user?

Keep reading to find out more!

NPCI: UPI Transactions Will Be Capped For All Apps

NPCI has created ripples across the digital payments industry by announcing that the total number of transactions for each app will be capped.

Although the decision was taken last week, but the rule will be retroactively applied from April onwards.

Incase the cap is violated, then NPCI can also penalize the apps.

Google Pay, PhonePe and Paytm are right now the leading apps for UPI payments, and this decision will severely impact their bottomline.

How Will This Cap Work?

As per the rules formulated by NPCI, the cap will work this way:

  • In the first year of operations, no app can have more than 50% share of UPI transactions
  • In the second year, 40% cap
  • In the 3rd year, and onwards, 33% cap.

This means that no payment app will be able to garner more than 50% share of the UPI transactions, ever. And once three years is done, then 33% will be the maximum limit.

An unnamed person close to the development said, “NPCI has explained that this is undertaken as a part of ensuring risk management review across products, and the impact of market capping will be discussed with each firm. Execution details will also be discussed with them in detail,”

How Will This Impact You?

Right now, Google Pay is #1 UPI payment app in India, with 42% market share, followed by PhonePe with 35% share, and Paytm with around 15-20% share.

Now, once Google Pay for instance, hits 50% share of all UPI transactions, then their users won’t be able to make UPI payments, and onboarding of new users will stop.

This will force the end-uer, that is you, to opt for other UPI payment apps.

Once 33% cap is enforced, then the going will become tougher. 

Sameer Nigam, co-founder and CEO, PhonePe has slammed this move, as he said, 

“UPI is a completely open and interoperable ecosystem by design. There is no barrier to entry to new entrants at all. New players are still entering every day. So why penalize consumers by forcing them to use anything but the best apps/service providers available at any time?” 

It seems that NPCI doesnt want any UPI payment app to get too big, too influential and this is the reason this capping mechanism has been imposed.

We will keep you updated, as more details come in.

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