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NPCI caps transaction volumes for UPI apps at 30%; PhonePe, Google Pay may be impacted

Updated : November 05, 2020 09:53 PM IST

The cap will be calculated on the basis of total volume of transactions processed in UPI during the preceding three months on a rolling basis.

In a bid to address risks and protect the growing UPI ecosystem, National Payments Corporation of India (NPCI) has issued a 30 percent volume cap on UPI transactions for Third Party App Providers (TRAPs).

The move intends to balance consumer experience with growth outlook of UPI ecosystem.

National Payments Corporation of India (NPCI) said that with UPI reaching 2 billion transactions a month and with potential for future growth, it has issued a cap of 30% of total volume of transactions processed in UPI, applicable on all Third Party App Providers (TPAPs).

The developments will take effect from January 1, 2021.

#NPCI announces a 30% cap for third party applications offering UPI services. pic.twitter.com/8nDio7y1Ea
— Ritu Singh (@_ritusingh) November 5, 2020

The cap will be calculated on the basis of total volume of transactions processed in UPI during the preceding three months on a rolling basis.

Existing app providers with more market share more than 30 percent market share will have two years from January 2021 to comply with the latest developments.

This comes in days after PhonePe claimed 40 percent market share in UPI transactions. Soon after the announcement, NPCI also gave the go-ahead for WhatsApp to launch UPI services in a phased manner.

Also read: NPCI gives approval for WhatsApp to 'go live' on UPI in phased manner

The decision will impact PhonePe and Google Pay the most, since both the UPI-based transactions app have market share higher than 30 percent.

Third-party apps share in UPI transactions (approximations):

Google Pay > 40%
PhonePe ~40%
Paytm & Mobikwik together ~20%

The developments will help NPCI to address the risks and protect the UPI ecosystem as it further scales up.

Two days ago, NITI Aayog CEO, Amitabh Kant had announcened that UPI-based transactions have breached 2 billion mark in October 2020. He also added that transaction value had increased 101 percent - from 1,91,359.94 crore to Rs 3,86,106.74 crore.

NPCI caps transaction volumes for UPI apps at 30%; PhonePe, Google Pay may be impacted

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