“India Postpones UPI Payments Market Share Limit, Boosting PhonePe and Google Pay: Sources”

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India is set to delay the imposition of market share caps on Unified Payment Interface (UPI) transactions, providing relief to digital payment giants like PhonePe and Google Pay. The decision, made by the National Payments Corporation of India (NPCI), aims to prioritize growth while addressing concerns about market concentration.

Sources familiar with the matter revealed that NPCI will extend the deadline by up to two years beyond the original year-end target to cap any company’s market share in UPI transactions at 30%. This move comes as PhonePe’s market share in UPI payments has surged to 48.3%, while Google Pay’s share has slightly declined to 37.4%.

The NPCI’s decision reflects the significant role played by PhonePe and Google Pay in the UPI ecosystem, where they collectively processed over 11.5 billion transactions in April alone. Despite their inability to charge for UPI services, these platforms have leveraged their user base to offer additional financial services like loans and insurance.

The initial market-share cap announcement was made in 2020, with a deadline extended to the end of 2024. However, the current market dynamics and the growth trajectory of PhonePe and Google Pay necessitate another extension to avoid disrupting UPI payments growth.

While NPCI has not officially commented on the extension, industry insiders anticipate a formal announcement closer to the deadline. Discussions also include considerations about allowing payment firms to charge for UPI transactions, a move that could incentivize competition and innovation in the sector.

The recent surge in UPI transactions, marked by a 49.5% increase in April compared to the previous year, underscores the importance of digital payments in India’s evolving financial landscape. Regulatory discussions, including brainstorming sessions with industry leaders, are ongoing to explore ways to expand the UPI user base, which stood at around 300 million users and 50 million merchants as of late last year.

Sources By Agencies