The Market Cap Deadline for UPI Apps has been Extended by NPCI by 2 Years

Nitin Konde, Varun Bhardwaj

Jan 3, 2025 — 3 min read

NPCI Extends UPI Apps' Market Cap Deadline by Two Years

The deadline for imposing a transaction volume cap on Unified Payments Interface (UPI) apps has been extended by two years, to December 31, 2026, by the National Payments Corporation of India (NPCI). The NPCI has extended this deadline for the second time.

The industry giants PhonePe and Google Pay, who handle the majority of UPI transactions in the nation, are anticipated to receive much-needed relief from the most recent development. According to NPCI data, the two handled roughly 47.8% and 37.02% of UPI transaction volumes in November, respectively. The deadline for current third-party application providers (TPAPs) to comply was extended by an additional two years by the apex payments authority after "considering various factors." This occurs during a period of explosive rise in transaction volumes for the real-time payments system.

Rise in UPI Transactions

As of November, UPI had recorded 155.44 billion transactions to date this year, up 32.2% from 117.58 billion transactions in CY23. In November 2020, the NPCI first suggested a 30% cap on the number of transactions that UPI apps may handle. The current players were given two years to comply with the volume cap. In order to address possible issues like the risk of concentration among leading businesses, the apex payments authority sought to implement market cap. UPI apps, meanwhile, have expressed concern that a quota may restrict both their and UPI's growth.

Players Welcomed the Move

"I firmly think that this market cap problem will be resolved by the market itself within the next two years." According to Vishwas Patel, head of the Payments Council of India (PCI) and joint managing director of Infibeam Avenues, preventing the expansion of incumbents is not the best course of action and would have undoubtedly hindered the growth of UPI.

"Since we firmly believe that customers will select from among the dozens of new UPI apps available, we applaud the NPCI's extension of the market cap deadline for UPI apps. Paytm is making a comeback to regain its market share," stated Patel. While elaborating further, Patel added that a number of innovative apps, like Cred, WhatsApp Pay, Bharat Interface for Money (BHIM), and Navi, are expanding rapidly. In August 2024, the NPCI split off BHIM to become NPCI-BHIM Services Ltd. (NBSL).

The NPCI also removed the UPI user onboarding cap for WhatsApp Pay, the messaging juggernaut WhatsApp's UPI platform. All Indian users will now be able to access the messaging giant's UPI services. "WhatsApp Pay may now offer UPI services to all of its users in India thanks to this development," the apex payments authority said in a statement released on 1 January.

"We're dedicated to making WhatsApp payments easy, dependable, and safe. Through a variety of use cases, such as bill payment, ticket booking, and shopping, we hope to improve users' lives and make them more convenient," the release stated further. A WhatsApp representative stated, "We want to continue supporting India's digital and financial inclusion strategy while also accelerating the use of digital payments and UPI.