NPCI extends market cap deadline for UPI apps by two years to end of 2026

Apex payments body also relaxes user onboarding limits for WhatsApp Pay, enabling messaging firm to onboard all of its India users

The National Payments Corporation of India (NPCI) has extended the deadline for implementing transaction volume cap on Unified Payments Interface (UPI) apps by two years till December 31, 2026. This is the second time that the NPCI has extended this deadline.

 

The latest development is expected to provide a much-needed relief to market leaders PhonePe and Google Pay, which process the lion’s share of UPI transactions in the country. The two processed about 47.8 per cent and 37.02 per cent of UPI transaction volumes, respectively, in November, according to data published by NPCI.

 

The apex payments body, “considering various factors”, extended the timeline for compliance of existing third party application providers (TPAPs) by another two years. This comes at a time when the real-time payments system has seen euphoric growth in terms of transaction volumes.

 

 

UPI clocked 155.44 billion transactions this year as of November, a 32.2 per cent increase from 117.58 billion transactions in calendar year 2023 (CY23). The figures for December 2024 are yet to be published.

 

The NPCI had initially proposed a 30 per cent cap on the volume of transactions that UPI apps can process back in November 2020, and had given time to the existing players to adhere to the volume cap in two years’ time.

 

The apex payments body was seeking to introduce market cap to address potential concerns such as concentration risks among top players. However, UPI apps have been concerned that a cap may limit their growth, and the growth of UPI.

 

“I strongly believe that in the next two years, the market itself will resolve this market cap issue. Blocking growth of incumbents is not the right strategy and would have surely slowed UPI’s growth,” said Vishwas Patel, chairman of Payments Council of India (PCI) and joint managing director at Infibeam Avenues.

 

“We welcome the extension of the market cap deadline of UPI apps by the NPCI as we strongly believe that the users themselves will choose from dozens of new UPI apps available. Paytm is getting back to capture its lost market share. Navi, Cred, Bharat Interface for Money (BHIM), WhatsApp Pay, and so many new apps are growing strongly,” Patel added.

 

The NPCI hived off BHIM into a new entity NPCI-BHIM Services Ltd (NBSL) in August 2024.

 

Meanwhile, the NPCI also lifted the UPI user onboarding limit for WhatsApp Pay, the UPI platform of messaging giant WhatsApp. The messaging giant will now be able to extend its UPI services to all its users in India.

 

“The NPCI is removing the limit restrictions on user onboarding on WhatsApp. With this development, WhatsApp Pay can now extend UPI services to its entire user base in India,” the apex payments body said in a statement issued on Tuesday.

 

“We're committed to making payments on WhatsApp simple, reliable, and secure. Our goal is to add value and convenience to users' lives through various use-cases like bill payments, ticket booking, and shopping. We aim to accelerate digital payments and UPI adoption, and continue contributing to India's digital and financial inclusion agenda,” a WhatsApp spokesperson said.

 

In November, it processed just 51.76 million transactions amounting to Rs 3,890 crore. It is ranked 11th on the UPI leaderboard. At present, WhatsApp messaging service has a base of over 500 million users in India.

 

Earlier, the payments body had placed a limit on the number of users that can be onboarded on WhatsApp Pay. The limit was set at 100 million users. The NPCI granted WhatsApp approval in November 2020 to go live on UPI in the multi-bank model in a graded manner, allowing 20 million users to start off with. The number was later increased to 40 million in 2021. A year later in 2022, the Meta-owned company was permitted to onboard 100 million users.

 

The NPCI allowed WhatsApp Pay to go live on UPI in a graded manner because it did not want the messaging service to run away with the UPI market.

Case file

 

> This is the second extension in timeline to cap UPI volumes

> NPCI introduced market cap to address potential concentration risks

> UPI has seen euphoric growth, transaction volumes up 32%

> WhatsApp may see increased volumes after removal of user onboarding limits

> It processed 51.76 million transactions in November