Relief for PhonePe, Google Pay as NPCI extends UPI volume cap deadline to Dec 31, 2024

National Payments Corporation of India (NPCI), which runs the UPI digital pipeline, has on Friday extended deadline for limiting volume cap to 30% for TPAPs in UPI by two years till December 31, 2024.

TPAPs are third-party app providers. At present, there is no volume cap.

This should come as a relief for Unified Payments Interface (UPI) players like Google Pay and PhonePe, which account for a market share of about 80%.

NPCI, in November 2022, had proposed a 30% volume cap for TPAPs in a bid to avoid concentration risk.

NPCI in 2020 came up with a directive to cap the share of transactions a third-party application provider (TPAP) could process at 30% of the volume of transactions handled on UPI, effective January 1, 2021, which is to be calculated on the basis of the volume of transactions processed during the preceding three months.

However, it gave the existing TPAPs, such as PhonePe and Google Pay, which exceed the desired market cap, two additional years, starting next year to comply with the directive.

Earlier this year, the Reserve Bank of India (RBI) came out with a consultation paper on charges in payment systems, which made a case for a tiered charge to be imposed on UPI transactions in line with Immediate Payment Service (IMPS) transactions.

The government later issued a statement noting that UPI is a digital public good with immense convenience and productivity gains for the economy, and there are no plans to levy any charges for UPI services.

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