NPCI extends 30% UPI volume cap by two years; removes user limits for WhatsApp Pay
02 Jan 2025, 06:48 PMLast year, The Head and Tale reported that NPCI was facing difficulty in implementing the 30% cap on UPI market share; and the market was going to miss the December 2024 deadline too.
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The National Payments Corporation of India (NPCI) has extended the market cap deadline by another two years. The cap was first announced in 2020 with an aim to reduce the concentration risk in the digital payments market.
This is the second time NPCI has extended the timeline by two years, as PhonePe and Google Pay hold close to 85% market share of UPI payments in India. Last year, The Head and Tale reported that NPCI was facing difficulty in implementing the 30% cap on; and the market was going to miss the December 2024 deadline too.
"Considering various factors, the timeline for compliance of existing TPAPs who are exceeding the volume cap, is extended by two years i.e. till December 31, 2026," the RBI said in a circular on December 31.
It is not clear whether with the same set of UPI heavyweights and a handful set of new players, the market is going to see any dramatic shift even after two years.
However, in order to achieve this and increase competition, NPCI has finally removed user onboarding restrictions for WhatsApp Pay. The fintech regulator had previously increased the limit to 100 million users for WhatsApp Pay in November 2022.
Now, WhatsApp Pay has received a go-ahead to offer UPI payments services to millions of users in India, which is expected to be over 500 million.
It would be interesting to see if WhatsApp will be able to make any dent in UPI payments space because even with 100 million user cap, WhatsApp ranked 11th among UPI apps in terms of the number of transactions as of November 2024. Currently, PhonePe dominates the market with 48% share by volume, followed by Google Pay (37%) and Paytm (7%).
In 2024, more than 20 companies received NPCI approval to operate as a third-party application provider (TPAP). Since 2016, total 40 firms have received TPAP licence.
On December 27, the Reserve Bank of India allowed full-KYC Prepaid Payment Instruments (PPIs) holders to make UPI transactions via third-party applications.
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