The National Payments Corporation of India (NPCI) on Friday extended by two years, until the end of December 2024, the deadline for third party UPI participants to reach their 30 percent volume threshold in digital payment transactions.
Third-party app providers (TPAPs), which account for the bulk of UPI-based transactions and include Walmart's PhonePe and Google Pay, may find respite from the judgement.
The Unified Payments Interface (UPI) is operated by NPCI and is utilised for real-time payments between peers or at the point of sale by businesses.
One third-party app will now be limited to handling no more than 30% of the total volume of UPI transactions, according to NPCI's announcement from November 2020. The cap was scheduled to go into effect on January 1, 2021.
The TPAPs (live on November 5, 2020) that were above the cap, however, were granted two years to gradually comply with the standards.
The deadline for compliance for existing TPAPs who are exceeding the volume cap is extended by two (2) years, or until December 31, 2024, to comply with the volume cap, according to a circular from NPCI. "Taking into account the present usage and future potential of UPI, and other relevant factors," the circular stated.
In addition, NPCI stated that other existing and new players (banks and non-banks) must step up their consumer outreach in order for UPI to grow and the market to reach overall equilibrium. This is due to the significant potential of digital payments and the requirement for multi-fold penetration from its current state.
TPAPs often collaborate with banks in order to recruit users and handle their payments at the back end.
According to a source from last month, the NPCI intends to ask the Reserve Bank to adopt the earlier date of December 31, 2023, for setting a 30 percent volume ceiling on players. It should be emphasised that there is presently no volume cap, which results in Google Pay and PhonePe holding almost 80% of the market share.
