The National Payments Corporation of India (NPCI) is planning ways to limit the Unified Payment Interface’s (UPI) dependence on any single third-party application, according to the report from ET.
Reportedly, it proposes to do this by restricting the share of transactions of any single payment company. NPCI is a not-for-profit ‘umbrella body; which owns and operates UPI.
Interestingly, the Indian UPI ecosystem is currently dominated by Google Pay, Paytm, Walmart-owned PhonePe, and Amazon Pay. They almost together control over 90% market share.
Some previous reports from ET suggested that NPCI could cap the share of transactions at 33% of the overall market share. By this, the controlling body wants to insulate the broader UPI ecosystem against any systemic collapse.
But now sources said to ET that new regulation capping the transaction share at 50% for the first year of implementation and reducing it to 40% and 33%, respectively, over the next two fiscal years.
Sources also informed ET that if this transaction limit is found to be breached, the NPCI may send warnings to companies to stop onboarding new customers and disable new transactions or might incur a penalty.
But we still want to confirm that all these things are “a work in progress” and NPCI has not issued any formal circular or internal advisories on how the system will be implemented.
Launched in 2016, UPI becomes one of the fastest-growing retail payment systems in the world. Also in June, a record 1.34 billion transactions were processed on the system.
The fun fact is, according to the RBI’s Data the volume of transactions as on July 29, at 1.37 billion, has already exceeded the June volumes record.
This development comes when Facebook-owned instant messaging app WhatsApp is badly trying to launch it’s UPI based WhatsApp Pay service in India. And recently some reports also suggested that NPCI told RBI that WhatsApp is now fully compliant with India’s Data-Localisation norms, which is a big hope for this instant messaging app which has around 400 million active userbases in India.