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NPCI has announced a 30% cap on third party UPI app transactions

National Payments Corporation of India (NPCI)
(Image credit: NPCI)

The National Payments Corporation of India (NPCI) the umbrella organisation for operating retail payments and settlement systems in India, has announced a new norm. According to the NPCI a new cap will come into effect from January 2021, that will set a 30% cap on third party UPI app transactions.

This is likely to affect apps like Google Pay and PhonePe the most since they have the bulk of the transactions.

NPCI caps third party UPI app transactions to 30%: Details

According to the NPCI, the Unified Payments Interface or UPI transactions of India exceeded two billion transactions. And Third Party Administrators or TPIs like Google Pay and PhonePe have handled the lion’s share of this. 

And this new norm from the NPCI will cap the proportion of transactions that a single company can process to 30%. The reason being stated is to “address the risks and protect the UPI ecosystem as it further scales up.”

With Google Pay and PhonePe being on the losing side of things, Paytm and Mobikwik would benefit from it. This is because this will allow them the room to grow while Google Pay and PhonePe will be stagnated. This will also cap the number of transactions that a company can do in a month, and will lead to more transaction failures.

Google Pay and PhonePe: Getting the short end of the stick

According to reports, Google Pay and PhonePe heavily dominate the UPI transactions ecosystem, and both companies handle around 40% of the transactions. While companies like Paytm and Mobikwik handle 20% transactions together. The new rule will see companies being calculated for 30% of the transactions that occurred in the past 3 months in a rolling manner. 

The NPCI will allow the TPAs two years to comply with the 30% share policy in a phased manner. The NPCI has not clarified what actions would be taken in case a company exceed the cap. And now WhatsApp has entered the fray by officially launching the WhatsApp pay option in India.