The National Payments Corporation of India (NPCI) has extended the UPI app market share deadline to 31 December 2026. The regulation aims to cap the market share of individual UPI apps to just 30%. Let’s understand the significance of this rule, and how it affects regular users with their digital payments.
Maximum 30% Market Share Rule for UPI Apps: Explained
In November 2020, the NPCI proposed a rule to restrict the maximum market share of a single UPI app to just 30%. The motive was to prevent an oligopoly in India’s digital payments infrastructure. The Government of India and the Reserve Bank of India approved the regulation. UPI apps were ordered to comply with this rule with a deadline of 31 December 2024.
India is the world’s largest market for real-time digital payments powered by UPI. However, it is dominated by two players: Google Pay and PhonePe which have a combined market share of 85% of the total UPI transactions in the country.
Both are owned by foreign entities (GPay by Google and PhonePe by Walmart), which is a matter of concern since the GoI wants maximum technologies to be self-reliant under the Atmanirbhar Bharat ideology.
The regulation had a positive effect as we have witnessed several new UPI apps like CRED, Amazon Pay UPI, WhatsApp UPI, and many others. These apps can eventually eat into the market share of Google Pay and PhonePe, thus maintaining a healthy and competitive environment. So, why the market share capping even now?
Why the Deadline Has Been Extended?
Despite the emergence of new UPI apps, the duopoly of Google Pay and PhonePe has not shrunk by any significant margins. Both apps currently have a market share of 37% and 47.8%, respectively, which is way above the imposed cap of 30%.
The market share of a UPI app is calculated from the number of transactions it handles. Hence, if the NPCI decides to enforce its 30% maximum cap rule, the remaining 7% and 17.8% of transactions in Google Pay and PhonePe would not go through smoothly. Users may face service disruption while making UPI payments, creating a situation of panic.
For the convenience of Indian users, the NPCI has extended the deadline to 31 December 2026. Hence, UPI apps now have two more years to stabilize the market share distribution. The entry of new-age UPI apps can help in the objective. Once people start using more of the new players, this can eventually even out the market share, thus, fulfilling the purpose of the rule.
What Does This Mean to Google Pay and PhonePe Users?
If you are a regular Google Pay or PhonePe user, you need not worry about the new NPCI rules. You can continue to use both apps for your regular UPI payments without any restrictions or risk of transaction failure.
From the perspective of Google and Walmart, neither company can do much about the situation. The only feasible solution for them to comply with the 30% market share is the emergence of new UPI apps.
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