- by Stocktry Expert
- 01st Aug 2020
UPI Transactions capped by the Government
Unified Payments Interface transactions for apps like Google Pay, PhonePe, Paytm and others have been capped by NPCI (National Payments Corporation of India).
This decision taken earlier in July would be in effect from 1st April 2021. NPCI has asked apps to limit payments upon exceeding 50% of all UPI transactions in the first year. In the second, it is 40% and 33% in the third.
Warnings would be sent to the apps and banks when nearing the threshold. Upon breach, they would be penalized with stoppage of onboarding new customers.
Sameer Nigam, CEO of PhonePe said that this won’t be an issue now as no one is near the 50% mark but the challenge would begin following year when the cap would come down to 40%. He added that there is no barrier to entry of any new entrants in this segment and questioned why customers should be penalized by forcing them to use anything but the best apps.
This decision has been taken to limit damage to the payment ecosystem if the system collapses. Though, this would hamper the growth of players in this segment. A senior executive of a payment firm said that with the capping of market share, the risk of outages due to one large player can be mitigated. NPCI became stricter after Yes Bank collapse in March.
In June 2020, UPI recorded transactions worth INR 2,61,835. Currently, Google Pay is the largest player followed by PhonePe. WhatsApp might also soon enter this market.
