National Payments Corporation of India (NPCI) has extended the deadline for imposing market share cap on Unified Payments Interface (UPI) apps by two years. Now this limit will not be applicable till December 2026. The decision brings relief to leading UPI platforms like PhonePe and Google Pay, which hold leading positions in the Indian UPI ecosystem.
What is market share cap?
The market share cap was proposed in 2020, with the aim of preventing any UPI payment app from having more than 30% market share. Its objective was to promote competition and prevent monopoly. However, currently PhonePe has a market share of 47.8%, while Google Pay has 37%. Implementing the cap at this time could have disrupted the services of these platforms, which serve millions of users.
Purpose of extending the time limit
NPCI has tried to balance competition and innovation in the market by extending the deadline. This will give emerging fintech platforms more time to strengthen their business.
New possibilities for WhatsApp Pay
NPCI has also removed the limit of 100 million users on WhatsApp Pay, which will now enable the Meta-owned platform to compete more effectively in India’s digital payments sector.
Increasing popularity of UPI
UPI recorded a sharp growth of 46% in 2024, where the number of transactions reached 172 billion, from 118 billion in 2023. This growth reflects the important role UPI plays in India’s digital economy and the need for a balanced regulatory change.
future prospects
With the new deadline, major apps like PhonePe and Google Pay will get time to adapt their business models and diversify services. This expansion may also encourage collaboration between established and new players, leading to better services for consumers.