NPCI in talks with RBI on volume cap deadline to 30%


The National Payments Corporation of India (NPCI) is holding talks with the Reserve Bank of India on the implementation of its proposed 31 December deadline for limiting the volume cap of players. The deadline is to limit the cap of players to 30 per cent. NPCI runs the UPI digital pipeline. Currently, there’s no cap on volume and Google Pay and PhonePe hold the market share of about 80 per cent.

Back in November 2022, the NPCI had proposed a 30 per cent volume cap for third-party app providers (TPAP). The proposal was made to avoid concentration risk. Sources have said that a meeting has been scheduled to look at all the aspects. In the meeting, senior officials of the finance ministry and the RBI will also participate.

Currently, the NPCI is evaluating all the possibilities and no final decision has been taken to extend the December 31 deadline, sources have said, adding that the corporation has also received proposals from the stakeholders to extend the deadline. The representations are being examined, they said.

According to the sources, NPCI is likely to decide on the issue of UPI market cap implementation by this month-end.

NPCI in 2020 came up with a directive to cap the share of transactions a third-party application provider (TPAP) could process at 30 per cent of the volume of transactions handled on UPI, effective January 1, 2021, which is to be calculated on the basis of the volume of transactions processed during the preceding three months.

However, the existing TPAPs such as PhonePe and Google Pay were given two years more to comply with the orders. 

Earlier this year, the Reserve Bank of India (RBI) came out with a consultation paper on charges in payment systems, which made a case for a tiered charge to be imposed on UPI transactions in line with Immediate Payment Service (IMPS) transactions. The Central government also said that UPI is convenient and that there were no plans to put any charges on it.

(With agency inputs)

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