UPI Market Share Cap Deadline Extended By Two Years

India has decided to wait a little longer before introducing a rule that would limit how much of the market third-party app providers can have in the country’s Unified Payments Interface (UPI).

The National Payments Corporation of India (NPCI) extended the deadline for a 30% market share cap by two more years, moving it from the end of 2024 to December 2026. This is the second time it has been delayed.

NPCI’s 30% Cap Rule Aims To Promote Competition And Improve Market Safety

This decision helps Google Pay and Walmart-backed PhonePe, which together handle more than 85% of UPI payments.  NPCI noted that looking at different factors, it has decided to give third-party app providers (TPACs) who are above the volume limit two more years to fix it.

While PhonePe and Google Pay are the biggest players right now, WhatsApp is also trying to join the game. Recently, it got permission to roll out its person-to-person payments service to all its 500 million Indian users.

According to NPCI’s rule, no digital payment company should handle more than 30% of all UPI transactions. The rule is meant to spread out the market and keep it safer for everyone.

Google Pay and PhonePe now have until then to lower their shares to 30%. In November 2024, PhonePe had 47.8% share of UPI payments, and Google Pay had 37%.

UPI is expected to pass 171 billion transactions in 2024, growing 45% compared to the preceding year—an amazing rise given its already huge transaction numbers. The platform saw about 117 billion transactions in 2023.

UPI, already India’s favorite digital payment method and a shining example of great Digital Public Infrastructure (DPI), may be hitting a limit. However, the federal government and the central bank are working hard to spread its use worldwide.

India Seeks To Expand UPI Usage To 4-6 More Countries By 2025

By 2025, UPI could start working in 4 to 6 more countries. It is already being used in the UAE, Mauritius, Sri Lanka, France, Singapore, Bhutan, Peru, and Nepal.

To encourage UPI payments, the Reserve Bank of India (RBI) changed the rules for small payments made offline. The bank raised the limits for UPI LITE, which is a way to make small payments quickly and easily.

According to the RBI, people can now pay up to ₹1,000 ($11) in one go with UPI LITE, and the total limit is ₹5,000 ($58). UPI LITE lets people make small payments without needing to check with the bank every time, while still keeping things safe.

The RBI also allowed small banks to give pre-approved loans through UPI. This will make it easier for people to borrow money using the platform.