NPCI (National Payments Corporation of India), yesterday, announced new rules for online payments through UPI apps. As per NPCI, there will be a 30% transaction volume cap on the number of transactions one UPI app can process to protect the “UPI ecosystem". Somehow, this move can restrict any UPI app becoming the market leader. This new will also impact users for long term apparently users may not notice any sudden change the way UPI apps are operated.
Approximately 97% of UPI market share is governed by Google Pay, PhonePe, Paytm and Amazon Pay. Beyond that, in India, there are 21 in total 3rd party UPI apps including WhatsApp Payments. Around 80% of UPI Payments are made through Google Pay or PhonePe followed by Paytm and Amazon are on third and fourth position respectively.
What is 30% UPI transaction cap rule???
NPCI has instructed that 3rd party UPI Apps can't surpass 30% overall volume of payments processed in UPI during the preceding 3 months (on a rolling basis) from January 2021 onwards. Hopefully, Google Pay, PhonePe, Amazon Pay along with other apps are given relief with an exceeding cap period of 2 years to comply with the same in a phased manner. This explains that new UPI players like WhatsApp Payments will have 30% cap limit on the volume of transaction made of the Total volume of UPI payments. Also, Google Pay and PhonePe will have to minimize their number of transaction.
Let's assume how the usage of UPI apps may change
The new rule leads to the more failed transaction if the limit gets exceeded by the market-leading apps. Else these apps may set a per-day limit for every user out there (for example - 5 transaction or less per day) or reducing the payment amount.