To bring parity in UPI digital payments and ending the monthly race to the top spot, the National Payments Corporation of India (NPCI) has issued guidelines capping the market share of UPI transactions to 30%. NPCI believes that in due course the UPI volumes will increase exponentially and all the players in the UPI ecosystem will have an opportunity to grow their volumes further. This effectively means that any payment provider will not be able to process over 30% of all UPI transactions.
In November last year, the NPCI introduced a market share policy curbing an individual UPI players' market share to 30% from January 1 this year onward. This was done in order to address the risks and protect the UPI ecosystem.
According to NPCI, starting from January 2021 on a three-month rolling basis, all UPI payment apps will be subjected to a three-level threshold monitoring by NPCI with certain exemptions. All UPI apps that have breached 25% of market share will receive an "alert" from NPCI which they'll have to acknowledge, on exceeding 27% market cap. After that threshold, the app will have to provide evidence to NPCI on its plans to bring down transaction volumes. When they reach the permissible 30% cap, the app will have to stop new onboarding and provide an undertaking to NPCI.
NPCI said that exemptions up to six months may be provided by the non-profit umbrella body for retail payments in India, on a case-by-case basis to prevent customer disruptions.
"The design principle used in this is to control the volume cap by means of user on-boarding on the Third Party Application Provider's payment platform," NPCI said in a circular issued to all TPAPs and PSPs.
GooglePay and PhonePe both have a market share of over 40% each. A Paytm spokesperson said, "We are the leading payments provider in the country as we enable our users with all digital methods including UPI. NPCI decision will ensure that UPI payments don't become dependent on any player. We believe that implementation guidelines are clear and practical."