The National Payments Corporation of India (NPCI) has instituted a three-tier mechanism that will monitor the market share of third-party apps on the Unified Payments Interface (UPI) network. If a player breaches the market share threshold set, they will have to scale back their on-boarding, promotional activities and cash back offers, the NPCI said in a Standard Operating Procedure. In November last year, the NPCI introduced a market share policy curbing an individual UPI players' market share to 30% from January 1 this year onward. This was done in order to “address the risks and protect the UPI ecosystem.” The UPI space is dominated by PhonePe and Google Pay. As of February 2021, PhonePe a market share of 44% , while Google Pay had a 40% market share. "When we look at the future of UPI, reaching to billion transactions a day, there is a need to smoothen out all the transactions in the UPI ecosystem. One such effort was UPI multi-bank model, which was implemented to mitigate the risks on the banks by means of mandating large TPAPs for the UPI access. The suggested measures in this SOP, shall also encourage the new players to increase their volumes in UPI, so as to even out the distribution of market share among all participants."— NPCI Circular The new system has been designed keeping customer convenience in mind, the NPCI said in its circular dated March 25, 2021. How will it work? Level 1: If the UPI app's market share is…
