30% Market Cap For UPI Payment Apps: Govt May Extend Deadline Because Of This Reason
The National Payments Corporation of India (NPCI), is planning to extend the deadline for its contentious mandate requiring payment apps to hold no more than 30% market share, According to the sources.
Here NCPI, enables the country’s digital payment and settlement systems and its current deadline is January 2023.
The sources said, “There is no choice but to consider this actively. They (NPCI) are wary of disrupting users and in effect slowing down UPI growth,”.
It appears that NPCI is worried about market disruption for consumers at a time when third-party payment providers such as PhonePe and Google Pay still hold about 47% and 34% market share, respectively, by the end of April this year.
Further adding, “New entrants like WhatsApp Pay are yet to make a significant dent in the market in terms of cornering market share,”.
UPI Apps Resisting NPCI’s Mandate
Basically, NPCI’s mandate has seen concerted pushback from multiple UPI apps, mainly the market leaders PhonePe and Google Pay.
Besides this, the other two major players, Paytm and Amazon Pay are yet to break the dominance of the leaders.
Meta-owned WhatsApp Pay witnessed 2.5 million transactions in April compared with 2.6 billion on PhonePe.
WhatsApp Pay has now been allowed to scale its user base to 100 million consumers.
Sources also indicate that at least one of the biggest UPI apps has told its key stakeholders that the market cap mandate is unlikely to be implemented at the end of 2022.
Hence, it is not slowing down on plans to expand its user base.
Further adding, ‘While there is still some time (six months) to go before the end of the deadline but unless a player dramatically rises to disrupt the market, a delay in the said rule is being considered,”.
Apart from these, Tata Digital is also the new entrant on UPI.
UPI has emerged as one of the biggest beneficiaries from the tailwinds provided to digital payments with the onset of the covid-pandemic.
During this time, the consumers shunned cash amidst fear of transmission of the virus.
Since May 2020, the transactions on the UPI network have grown almost six-fold.
At the same time, the overall volumes on the UPI infrastructure crossed 1 billion for the first time, with total volumes touching 5.95 billion, last month.
Prior to this, during November 2020, NPCI first officially announced that it will issue a cap of 30% on transaction volume clocked by a player starting 2021.
That time, it said that the players will have a period of two years starting January 2021, to comply with the cap mandate in a phased manner.