In a move that raises the question of the seriousness with which companies in India take the government, the National Payments Corporation of India (NPCI) has pushed back the deadline to comply with its 30% cap on the market share of platforms operating on the Unified Payments Interface (UPI) for the umpteenth time. Now it is by two years.

Commentators see the move as a relief to Google Pay and Walmart/Flipkart-backed PhonePe, which currently command the largest UPI market share, but the authority sees it differently.

The extension comes after NPCI and the Reserve Bank of India (RBI) held consultations with the government.

Why did NPCI extend its UPI market cap deadline?

The NPCI had wanted to enforce the market cap rules last year in January. It had said back then that it would limit any single payments app from processing more than 30% of UPI transactions in a month. Since then, however, it has postponed the timeline several times.

In a circular issued yesterday, the NPCI extended the deadline once again to 31 December 2024. It said this was to take into account “the present usage and future potential of UPI and other relevant factors”.

“In view of the significant potential of digital payments and the need for multi-fold penetration from its current state, it is imperative that other existing and new players (banks and non-banks) shall scale up their consumer outreach for the growth of UPI and achieve overall market equilibrium,” the NPCI said.

How deadline extension impacts UPI platforms

The move comes as a shot in the arm for PhonePe and Google Pay, which collectively control more than 80% of UPI’s market share.

For platforms like Paytm and WhatsApp Pay, however, the extension could be seen as a natural loss.

As of October, Paytm had a market share of 15% on UPI. In comparison, PhonePe had a 47% market share while GooglePay accounted for around 35%. “We are obviously relieved to see the UPI market share cap get extended by two years. At PhonePe’s scale, to reduce our UPI market share to 30% we would be forced to deny UPI payment services to crores of Indians, and that would be totally detrimental to the incredible Indian digital payments growth story,” Sameer Nigam, CEO and founder of PhonePe said in a statement.

The CEO of PhonePe said that the new regulatory circular acknowledged that “the burden is on other existing and new UPI players to invest more time, effort and money to increase their own UPI market share.”

How is UPI doing?

After touching the zenith of Rs 12.11 lakh crore in October, the UPI transaction value for the month of November came in at Rs 11.90 lakh crore. The transaction count of 7.3 billion in October remained the same in November.

The Reserve Bank of India’s Payment Vision 2025 expects UPI to register an average annualised growth of 50%.