What's the news? The National Payments Corporation of India (NPCI) may extend the deadline for its mandate requiring UPI payment apps to hold no more than 30% market share, Economic Times reported on June 6. The current deadline is January 2023. Why? As of April 2022, PhonePe and Google Pay hold about 47% and 34% market share. Making them scale back on their market share will lead to market disruption for consumers, the NPCI fears. "There is no choice but to consider this actively. They (NPCI) are wary of disrupting users and in effect slowing down UPI growth," a person aware of the discussions told ET.When and why was this 30 percent cap instituted? NPCI announced the 30 percent cap on transaction volume in November 2020 and gave existing players two years, starting January 2021, to comply with the mandate in a phased manner. "In view of the recent growth in UPI transaction volumes, NPCI has analyzed the risks in the UPI ecosystem,” it said in its circular back then, adding that the market share cap has been introduced in order to “address the risks and protect the UPI ecosystem.” In March 2021, NPCI prescribed operational guidelines that detail how market share will be calculated and how apps will have to enforce the cap. What are PhonePe and Google Pay saying about the cap? Both payment apps have expectedly pushed back against any limits on market share saying that customers prefer their products because of lesser failed transactions. "If I am playing by all the rules of interoperability,…
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