NPCI announces 30% Cap for Third Party UPI apps; here's how it may affect digital payment in India
New Delhi | Jagran Technology Desk: In what could affect the functioning of Google Pay, PhonePe and other UPI apps, the National Payments Corporation of India (NPCI) has decided to set a cap of 30 per cent on total volume of UPI transactions processed by Third Party App (TPA) providers.
In a statement, the NPCI said that the new rule will come into effect in India from January 1, 2021, noting that the move will "help to address the risks and protect the UPI ecosystem as it further scales up".
"With UPI reaching 2 billion transactions a month and with potential for future growth, (NPCI) has issued a cap of 30 per cent of total volume of transactions processed in UPI, applicable on all Third Party App Providers (TPAPs)," the statement read.
What is the 30 per cent transaction cap rule?
According to the new NPCI rule, Third Party App Providers cannot "exceed 30 per cent of the overall volume of transaction processed in UPI during the preceding three months" from January 1, 2021. However, existing TPAPs -- Google Pay, Paytm, Amazon Pay and PhonePe -- exceeding the specified cap will have a period of two years from January 2021 to comply with the same in a phased manner.
The NPCI further said that the 30 per cent cap "will be calculated on the basis of the total volume of transactions processed in UPI during the preceding three months on a rolling basis".
Here's how it will change UPI apps:
While the NPCI claims that the move will create a more competitive market and reduce risks and protect the UPI ecosystem as it further scales up, TPAPs have expressed their concerns and called the move a "surprise".
"Digital payments in India is still in its infancy and any interventions at this point should be made with a view to accelerate consumer choice and innovation," Sajith Sivanandan, business head, Google Pay and Next Billion User initiatives, India was quoted as saying by India Today.
Media reports suggest that the move can cause several restrictions for the users. According to a report by The Times of India, the move will likely force the users to limit the number of transactions for the users. It might also force the users to download multiple UPI apps like Samsung Pay and Mi Pay to continue doing digital payements.
Posted By: Aalok Sensharma