NPCI’s 30 per cent cap on market share of third-party UPI players to impact consumers

Earlier this month, Walmart-backed Phone Be claimed it commands 40 per cent of the UPI market share with 250 million registered users.
For representational purposes (File Photo | AFP)
For representational purposes (File Photo | AFP)

BENGALURU: With the National Payments Corporation of India (NPCI) mandaring third party applications like Google Pay, Phone Pe, Paytm and Whatsapp Pay, among others, to process 30 per cent of the UPI transactions beginning January, 2021, consumers are apprehensive of how this will impact them. 

Amongst various modes of digital payments like debit and credit cards and Rupay, United Payments Interface (UPI) has been the most popular among Indian users having breached two billion mark in October alone, according to NPCI data.

Meanwhile, the implications of COVID-19 have accelerated digital adoption and the number of people using contactless payment options such as UPI has gone up significantly post-lockdown. 

The only time the UPI transactions witnessed a dip was in April likely due to a pause in most economic activity as the country was going through the lockdown phase.

Earlier this month, Walmart-backed Phone Be claimed it commands 40 per cent of the UPI market share with 250 million registered users.

Together, Google Pe and Phone Pe command over 80 per cent of the UPI transactions market.

With Whatsapp Pay also getting ready to roll out its payment service, a lot of concerns have arisen on how the new rules will play out.

According to fintech industry analysts, customers may not have to worry in the short term when it comes to using apps like Google Pay or Phone Pe for UPI transactions, since these companies have been given two years time beginning January, 2021 to comply with the new guidelines in a phased manner.

Eventually, however, these companies may restrict the number of times a user can opt for UPI transactions on any given app and increase the price limit to say about Rs 2,000 per customer.

As a result, users will need to move to other options or install other apps like MiPay, Jio Pay, Future Pay or Amazon Pay if a bulk of their payments, cash transfers is happening through UPIs. 

In total, there are 27 third party apps currently available in India which offer UPI services, but not all of them have a substantial user base.

NPCI’s 30 per cent capping announcement is expected to bring down the dominance of one particular company in the digital payments market.

Another point to be noted regarding availing of Whatsapp Pay service is that not all users will have the facility since NPCI has allowed the firm to only make it available for just 20 million customers.

Whatsapp, in general, has a user base of over 400 million in India.

The advantage of simple UPI processing with Whatsapp cannot be achieved fully in peer-to-peer transactions if the other party doesn’t have a Whatsapp Pay.

More clarity and detailed standard operating procedure  are awaited.

Cap doesn’t apply to Jio

The new caps do not apply to Reliance’s Jio Payments Bank, or to Paytm, because they have licenses and they do not fall into the “third-party apps” category.

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The New Indian Express