- by Stocktry Expert
- 04th Aug 2020
UPI transactions will be capped on Paytm, Google Pay and PhonePe
"UPI transactions will be capped for all apps", said NPCI
NPCI announced in the digital payments industry that the total transaction number for each app would be capped.
Albeit this decision was taken last week, but the rule will come into force from april ahead. NPCI can also penalize apps if the cap is violated.
Currently PhonePe, Google Pay and Paytm are the top apps for UPI payment and these apps can get affected by this rule.
How will it work?
This is how the cap will work, according to the rules of NPCI,
Any app can not have more than 50% share of UPI transactions, in operations of first year, 40% cap in second year and 33% cap in the third year and onwards.
According to this, no payment app will ever receive more than 50% of the UPI transaction. And once it is three years, there will be a 33% maximum limit.
As per the information,"NPCI has made it clear that this is done as part of securing a review of the risk management of the products, and the repercussions of market capping will be discussed with all firms. The implementation details will also be discussed with them in detail."
It's impact on you,
Currently top UPI payment apps in India are Google Pay with market share of 42%, respectively PhonePe with 35% share and Paytm with around 15-20% share. For example, after Google Payments, a 50% share in all UPI transactions is hit, then their users will not be able to make UPI payments, and new users' onboarding will stop.This will make you switch to another UPI payment app. And it'll become difficult once the 33% cap is applied.
“UPI is a completely open and interoperable ecosystem by design. There is no restraint to access to newcomers at all. New players are still joining every day. So why penalize users by forcing them to use anything but the best apps/service providers available at any time?” said co-founder and CEO of PhonePe, Sameer Nigam.
Looks like this capping rule has been appointed because NPCI doesn't want any UPI payment app to get significant and dominant.