NPCI Says to Talk to RBI on 30 Percent UPI Volume Cap Deadline
The National Payments Corporation of India (NPCI), which manages the UPI digital pipeline, is in talks with the Reserve Bank over the implementation of the proposed December 31 deadline to limit player capacity to 30 percent. Currently, there is no volume cap. Therefore, two players, Google Pay and PhonePe, account for almost 80 percent of the market. NPCI in November 2022 proposed a 30% volume of third party application providers (TPAP) in an effort to avoid the risk of concentration.
In this regard, sources say, a meeting has been called to take a closer look at all aspects. Apart from NPCI officials, senior officials of finance ministry and RBI also participated in this.
Currently, NPCI is exploring all possibilities and no final decision has been taken to extend the December 31 deadline, sources said.
NPCI has also received representations from industry stakeholders to extend the deadline and they are being evaluated, they added.
According to sources, the NPCI is likely to decide on the implementation of the UPI market cap by the end of the month.
The NPCI in 2020 has come up with an order to limit the quota of transactions that third party application providers (TPAP) can process to 30 percent of the amount of transactions handled on UPI, effective January 1, 2021, which must be accounted for on UPI. the basis of the volume of transactions processed during the last three months.
However, it has given existing TPAPs, such as PhonePe and Google Pay, that exceed the desired market cap, two more years, starting next year, to comply with the directive.
Earlier this year, the Reserve Bank of India (RBI) came out with a consultation paper on charges for payment systems, which proposed a tiered charge to be imposed on UPI transactions in line with the Immediate Payment Service (IMPS).
The government later issued a statement noting that UPI is a digital public domain with huge benefits and productivity benefits to the economy, and there are no plans to charge any fees for UPI services.
