As we step into 2025, digital payments in India are set for a fresh chapter. The National Payments Corporation of India (NPCI) has announced a two-year extension for the UPI market cap rule. NPCI is the official organisation which manages the UPI (Unified Payments Interface) ecosystem in India.
This extension will benefit UPI payment platforms at large, especially PhonePe and Google Pay. Additionally, WhatsApp Pay has been granted a major advantage with the removal of its user limit.
Curious about how this will impact you in the coming months?
Let’s explore the latest updates on the market share cap on UPI apps!
A Boost for WhatsApp Pay and UPI Payment Platforms
This is the second time that NPCI has extended the timeline for compliance with the UPI market cap rule. Digital wallets and UPI payment platforms like PhonePe and Google Pay currently hold around 85% of the digital payment market in India.
The Reserve Bank of India (RBI) has announced the new deadline as December 31, 2026. Additionally, the removal of user limits for WhatsApp Pay has given Meta’s payment platform a significant boost. Now, they can expand beyond the previous 100 million user cap.
The 30% Market Share Cap on UPI Apps
In 2020, NPCI had set a rule to prevent any single third-party app from controlling more than 30% of all UPI transactions. This was to ensure fair competition and reduce risks in the market. The original deadline for compliance was set for December 31, 2024.
The decision to extend the deadline was made because UPI transactions continue to grow rapidly. According to recent reports, they have made 171 billion transactions in 2024. This is a 45% increase from the previous year.
Dominance of PhonePe and Google Pay in UPI Payments
Currently, PhonePe holds 48% of the market, while Google Pay has 37%. New apps like Navi, Super.money and Fampay have joined the top 10 UPI apps. However, they hold less than 2% of the market share, and they are struggling to compete with the dominance of PhonePe and Google Pay. Their share is still too small to break the stronghold of PhonePe and Google Pay, which dominate the UPI payment platforms industry.
Growing Number of Third-Party Apps
In 2024 alone, 20 companies received third-party application provider (TPAP) approval from NPCI. This approval is necessary for companies to offer UPI services to users. Since 2016, a total of 40 firms have been granted TPAP approval, according to the NPCI website.
Impact on Bank Apps and UPI Limit Per Day
It’s important to note that the market share cap on UPI apps rule does not apply to bank apps. The popular UPI platforms partner with banks to connect to the NPCI network for transactions. In addition, the UPI limit per day remains a key factor in how users interact with UPI apps.
BHIM App’s Role and Future
As part of its strategy, the NPCI continues to support its own UPI app, BHIM. The BHIM app is seen as a national infrastructure tool rather than a competitor to third-party apps. As Dilip Asbe put it, “BHIM is the country’s own app,” and there are plans to expand its use globally, giving other countries the opportunity to operate their own versions of BHIM.
As NPCI pushes for BHIM’s growth, questions about fairness in competition with other third-party apps have surfaced.
Conclusion
With the government’s efforts to become digital India, UPI payment platforms continue to grow in popularity. NPCI’s decision to extend the market cap deadline for UPI apps and remove WhatsApp’s user limits is indeed a smart move.
While the market remains dominated by a few players, the rise of new UPI apps like Fampay signals continuous growth.
Source: MoneyControl
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