NPCI to Implement 30% UPI Market Cap for Third-Party App Providers by December 2024

NPCI to cap UPI market share at 30% for third-party apps by 2024, aiming to promote competition and innovation in the digital payments ecosystem.

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Dil Bar Irshad
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NPCI to Implement 30% UPI Market Cap for Third-Party App Providers by December 2024

NPCI to Implement 30% UPI Market Cap for Third-Party App Providers by December 2024

On April 21, 2024, industry players are awaiting the National Payments Corporation of India's (NPCI) implementation of a 30% market cap for third-party app providers like Google Pay and PhonePe, who currently hold an 85% share of the Unified Payments Interface (UPI) market. This move aims to minimize concentration risk and ensure market equilibrium by the December 31, 2024 deadline.

NPCI had earlier extended the deadline for third-party UPI players to meet the 30% volume limit by two years, till the end of December 2024. The corporation is expected to provide clarity on the implementation measures in the coming months, which may include stopping the onboarding of new customers for those exceeding the 30% market share, possibly in a phased manner to avoid disruption.

The risk of a single point of failure remains elevated when two players dominate such a high volume of UPI transactions, potentially leading to disorderly services and disruptions. NPCI's move intends to address this risk and promote innovation and competition in the UPI ecosystem.

Why this matters: The implementation of the market cap is vital for fostering a balanced and competitive UPI ecosystem, encouraging the growth of smaller players and new entrants. This move will have significant implications for the future of digital payments in India, as it aims to prevent market monopolization and ensure a level playing field for all participants.

NPCI has emphasized the need for broader consumer outreach by all players, including banks and non-banks, to enhance UPI adoption and achieve overall market equilibrium. The corporation will reassess its decision to impose the 30% cap on UPI services' market share by the end of 2024, taking into account the market's evolution and the progress made by various players in expanding their user base.

Key Takeaways

  • NPCI to implement 30% market cap for UPI apps like Google Pay, PhonePe by Dec 2024.
  • Measure aims to minimize concentration risk and promote competition in the UPI ecosystem.
  • NPCI may stop onboarding new customers for apps exceeding 30% share, in a phased manner.
  • Broader consumer outreach by all players to enhance UPI adoption and achieve market equilibrium.
  • NPCI to reassess 30% cap decision by end of 2024, based on market evolution and player progress.