NPCI and RBI in talks for volume cap deadline
The Reserve Bank and the National Payments Corporation of India (NPCI), which manages the UPI digital pipeline, are negotiating the implementation of the December 31 deadline for capping the number of players at 30%.
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There is no volume limit at the moment. Thus, two competitors — Google Pay and PhonePe — control nearly 80% of the market.
In an effort to reduce the risk of concentration, NPCI suggested a 30% volume cap for third-party app providers (TPAP) in November 2022.
According to sources, a conference was held to thoroughly examine every angle in this regard. Senior members of the finance ministry and the RBI joined the NPCI officials in this.
NPCI
According to the sources, NPCI is still considering all of the options and no decision has been made to officially extend the deadline of December 31.
Industry stakeholders have also submitted requests for a deadline extension to NPCI, and those requests are currently being reviewed, they noted.
The sources claim that NPCI will probably decide on the implementation of UPI market cap by the end of this month.
On January 1, 2021, NPCI issued a directive capping the percentage of transactions a third-party application provider (TPAP) could process at 30% of the volume of transactions handled on UPI. This percentage is to be determined based on the volume of transactions processed over the three months prior.
The existing TPAPs, such PhonePe and Google Pay, which have larger market caps than expected, were given a further two years to comply with the rule beginning in 2019.
In a consultation paper on fees in payment systems published earlier this year, the Reserve Bank of India (RBI) argued that UPI transactions should be subject to a tiered fee structure similar to that of Immediate Payment Service (IMPS) transactions.
Later, the government released a statement stating that there are no plans to levy any fees for UPI services and that UPI is a digital public good that offers tremendous convenience and productivity gains for the economy.
The post NPCI in talks with RBI on volume cap deadline appeared first on IndiaFrontline.
