NPCI's 30% UPI market cap deadline extension spurs industry prep

NPCI's UPI market cap: As the extended deadline for meeting the 30 per cent market cap for UPI transactions by third-party

players approaches, industry stakeholders are gearing up for implementation. NPCI, in December 2022, extended the deadline for third-party UPI players to meet the cap to December 2024. Presently, players like Google Pay and PhonePe dominate with an 85 per cent share of UPI transactions.

NPCI, which manages the Unified Payments Interface (UPI), is expected to outline implementation measures to minimise concentration risk. One option under consideration is to halt onboarding new customers for players exceeding the 30 per cent threshold, possibly phased to minimise user impact. Clarity on this is expected in the coming months to avoid service disruptions.

Addressing concerns over market concentration, experts highlight risks associated with dominant players, including service disruptions and limited space for innovation by smaller players. NPCI's move aims to balance market dynamics, promoting growth and innovation while ensuring a level playing field.

NPCI's circular emphasised the need for broader consumer outreach by all players, both banks and non-banks, to enhance UPI adoption and market equilibrium. With the UPI's significant growth potential, achieving balance among players is crucial for the ecosystem's healthy development.

(with PTI inputs)