NPCI looks to limit UPI dominance by single third-party application, may restrict share of transactions | Economic Times

Mumbai: The National Payments Corporation of India (NPCI) is thinking of ways to limit the Unified Payment Interface’s (UPI) dependence on any single third-party application. It proposes to do this by restricting the share of transactions of any single payment company, people familiar with the matter said. NPCI owns and operates UPI in the capacity of a not-for-profit “umbrella body”.The burgeoning UPI ecosystem is currently dominated by Google Pay, Paytm, Walmart-owned PhonePe and Amazon Pay, who together control over 90% market share. ET reported in September last year that NPCI could cap the share of transactions at 33% of the overall market share, to insulate the broader UPI ecosystem against any systemic collapse.The discussions have gathered steam over the last couple of months, the people said, and NPCI has held closed-door meetings with payment service provider (PSP) banks, members of UPI’s steering committee and select third-party players to discuss the implementation scope and challenges. 77274020One of the ways being considered is to introduce 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, one of the people said. In case the transactions limit is set to be breached, the NPCI may send warnings to companies to stop onboarding new customers and disable new transactions – else incur a penalty, the person said.The discussions are “a work in progress” and NPCI has not issued any formal circular or internal advisories on how the system will be implemented, another person aware of the matter said.NPCI declined to comment. “Imagine your payments will be distributed to other players, if you reach a market cap which is not under our control. And, players have to de-facto lose customers because new acquisitions will be stopped,” Sameer Nigam, founder of PhonePe said. “Also, why hasn’t there been a cap on other payment instruments? While none of the payment players is in the 50% discussion range, what is of concern is the market cap for the second year, as most of us are nearing the 40% cap. We are still awaiting clarity on this from NPCI,” Nigam added.