The National Payment Corporation of India (NPCI) has set an upper limit of 30% of the total amount of UPI transactions processed by third-party application (TPA) providers, which will take effect in January 2021. UPI (Unified Payment Interface) has exceeded the NPCI data, with 2 billion transactions, of which TPA (such as Google Pay and PhonePe) accounted for the majority of this number. NPCI writes that now, NPCI limits the proportion of transactions that a company can handle in order to “resolve risks and protect the UPI as it expands further.” This will largely affect Google Pay and PhonePe, and bring opportunities to other companies such as Paytm and MobiKwik. There are also concerns that limiting the number of transactions that a company can complete in a month may lead to a higher rate of transaction failure.

The UPI is dominated by only two companies-Google Pay and PhonePe. According to a recent report, the two companies accounted for approximately 40% of the total number of transactions. In addition, two other companies, Paytm and MobiKwik, accounted for nearly 20% of UPI transactions. From the government’s BHIM UPI application to many banking applications, all other applications hardly have any share.

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Under this new regulation, the company will see its share change. The -30% cap will be calculated based on the total volume of transactions processed by UPI in the previous three months. According to the announcement, TPA has a share of more than 30% and will have two years to gradually implement.

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It is not clear what will happen if a company reaches the upper limit—whether further transactions are allowed at that point in time or whether transactions must be stopped. This means that if you are using a popular TPA, such as Google Pay or PhonePe, will this cause the transaction to fail? It is not yet certain. WhatsApp is another competitor in this field and has been waiting for permission, and now NPCI has granted it the permission to continue the launch.

WhatsApp Pay has now been granted the authority to expand its users in stages, with a maximum user base of 20 million users. In contrast, PhonePe recently announced that it has reached the 250 million user mark.


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