The National Payments Corporation of India (NPCI), responsible for regulating retail payments and settlement systems in the country, has postponed the implementation of the market share cap for the widely used Unified Payments Interface (UPI), extends the deadline by another two years.
Earlier, NPCI had set a deadline of the end of 2024 to enforce a market share cap of 30% for companies handling payments using UPI. Extending this deadline is likely to benefit mobile payment platforms such as Walmart-backed (NASDAQ: WMT) PhonePe and Google Pay (NASDAQ: GOOGL), which are currently the two most popular apps for making UPI payments in India. This is the second time NPCI has extended the deadline.
“Considering various factors, the timeline for compliance of existing TPAPs exceeding the volume cap is being extended by two (2) years i.e. to December 31, 2026,” NPCI said in a statement. TPAPs, or Third Party Application Providers, are organizations that provide applications or platforms that allow users and merchants to send and receive UPI payments.
According to NPCI’s Compliance Mandatedigital payment companies were not allowed to exceed a 30% share of the transaction volume processed through India’s widely used UPI. Originally planned to enter into force at the end of 2024, this mandate will now be enforced from December 2026. The idea is to reduce the concentration risk in the market and ensure both user and system security.
Despite the entry of new players, Google Pay and PhonePe remain the two most popular apps for making UPI payments in India. Other key players include fintech companies such as Paytm, Navi, Cred and Amazon Pay (NASDAQ: AMZN).
Google Pay and PhonePe now have two more years to reduce their UPI market share to 30%. As of November 2024, PhonePe had a 47.8% share of UPI payments, while Google Pay had 37%.
UPI is expected to exceed 171 billion transactions in 2024, marking 45% year-over-year growth – an impressive increase given the already high transaction volume. The platform recorded approximately 117 billion transactions in 2023.
UPI, already most popular digital payments method in India and an example of effective Digital public infrastructure (DPI), will likely reach one saturation point. However, the federal government and central bank have pushed hard to increase their use worldwide.
In the year 2025, UPI can expand to another four to six countries. So far, UPI has expanded to United Arab Emirates (United Arab Emirates), Peru, Mauritius, Sri Lanka, Singapore, France, Bhutanand Nepal.
To promote UPI payments, Reserve Bank of India (RBI) changed the framework for digital payments to low values in offline mode, raising transaction limits for UPI LITTLE. UPI LITE is a payment solution designed for low value transactionsthat works within the existing UPI ecosystem protocols for mobile phones, ensuring compliance, commonality and system acceptance.
“The offline framework has been updated and the extended limits for UPI Lite shall be ₹ 1,000 11 ($11) per transaction, with ₹ 5,000 ($ 58) being the total limit at any point of time, the RBI said in December.
UPI LITE is seen as a customer friendly solutionwhich allows low-value transactions without relying on a sending bank’s real-time core banking system while providing sufficient risk mitigation.
Also, RBI authorized small finance banks to offer pre-sanctioned lines of credit through UPI, widening credit availability on the platform.
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