Till the relief of PhonePe and Google Pay, NPCI extends the UPI market cap deadline to December 31, 2024

The Unified Payments Interface (UPI) players now have until December 31, 2024, a two-year extension of the previous deadline, according to the National Payments Corporation of India (NPCI).

To prevent the concentration of UPI volumes in the hands of a few players, rules requiring each UPI third-party app to adhere to a 30 percent transaction volume cap were initially introduced in November 2020.

Approximately 96 percent of monthly UPI volumes are currently controlled by three players: PhonePe, Google Pay, and Paytm.

The timelines for compliance of current TPAPs who are exceeding the volume cap are extended by two (2) years, or until December 31, 2024, to comply with the volume cap, according to a statement from NPCI. "Taking into account the present usage and future potential of UPI, as well as other relevant factors," the statement read.

By the earlier deadline of December 31, 2022, all participants had to have a share of at least 30% in monthly UPI volumes.

The most current NPCI app-wise statistics shows that PhonePe held a volume market share of 47% for the month of October. In the month, Google Pay contributed 34% of the entire volume, and Paytm contributed 15%.

Due to users' decision to stick with one of the top three UPI apps, other players like Amazon Pay, WhatsApp Pay, and others currently have a tiny share.

Even though the market cap may be a negative for PhonePe and Google Pay, Paytm may benefit since it may receive a larger share of volumes if the guideline is put into place.

Concerns about how UPI players would lose market share arose after NPCI announced it would enforce a 30% market limit, essentially casting doubt on the ability to put these rules into effect. Since the announcement, UPI has experienced tremendous growth, but the top three players have remained unchallenged.

Sameer Nigam, co-founder and CEO of PhonePe, expressed surprise at the market cap requirements in an interview and said that the platform was powerless to reduce its stake.

"I have no control over the market share cap if PhonePe is the most popular app in a highly competitive market. They are free to pursue their own interests. What are you expecting of me? Tell the subsequent PhonePe user, "Don't use me." Can my next TV ad simply say, "Please don't install the PhonePe app," since we have the highest market share? "He had spoken.

The top players are gaining market share because, according to industry experts, customers do not see the need for multiple UPI apps and instead stick with their preferred apps.

UPI volumes have increased from 2,210 million in November 2020 to 7,309 million in November 2022, a growth of more than 230 percent. According to specialists in the field, enforcing a market share at this time would have also hindered UPI's impetus for growth.