While PhonePe and Google Pay are relieved that NPCI has extended the deadline, Meta-owned WhatsApp benefited greatly from the removal of user limits.
Dominant apps like PhonePe and Google Pay are probably relieved that the National Payments Corporation of India (NPCI), which operates the well-known mobile payments network UPI, has extended the market cap deadline by an additional two years.
The NPCI has also lifted WhatsApp Pay’s user onboarding restrictions in an effort to increase digital payments and encourage competition. The digital payments platform was formerly limited to 100 million users.
Even though new competitors joined the market this year, PhonePe and Google Pay still control around 85% of India’s digital payments market, marking the second time the NPCI has extended the timetable by two years.
In a circular released on December 31, the RBI stated that “the timeline for compliance of existing TPAPs who are exceeding the volume cap is extended by two years, i.e. till December 31, 2026,” due to a number of issues.
With a deadline of December 31, 2024, NPCI implemented a cap in November 2020 to make sure that no single third-party app provider (such as Google Pay or PhonePe) controls that more than 30% of all UPI transaction volumes.
The goal of that was to prevent market concentration risk and guarantee to a user and system security as UPI-facilitated digital payments will continue to grow, surpassing its 171 billion transactions in 2024—a 45 percent increase from the year before.
According to the most recent data available, Google Pay and PhonePe both surpass will the cap, with the latter controlling an additional 37% of the market and the former controlling 48%.
Navi, super.money, and Fampay entered the top 10 UPI apps this year, giving NPCI optimism that new competitors will carve out a niche for themselves. Together, these competitors have less than 2% of the market, which is insufficient to challenge the PhonePe-Google Pay monopoly.