UPI Payment Apps May Soon Impose a Transaction Limit

The National Payments Corporation of India (NPCI) may implement its proposed 31 December 2022 deadline to limit the volume cap for the Third-Party UPI App Providers (TPAP). If the NPCI implements its proposal, people cannot make unlimited transactions through Google Pay, PhonePe or other UPI applications.

UPI platforms such as Google Pay and PhonePe currently dominate the market with approximately 80% share. The NPCI sent a 30% volume cap proposal in November 2022 for approval from the Reserve Bank of India (RBI) to avoid the monopoly of any UPI app. Currently, there is no transaction cap on any UPI-based application like PhonePe, Paytm or Google Pay.

A meeting was held to understand the current status quo following the proposal. The reports suggest that the senior officials from NPCI, RBI and Finance Minister were present at this meeting. However, a decision has yet to be taken.

According to a few reports, industry stakeholders requested NPCI to extend the deadline. The NPCI is examining whether to extend the deadline or not. The issue of UPI market limit implementation might get resolved by the end of December. 

The NPCI recently said it has also waived the switching fee for all RuPay acquiring and issuing member banks for e-commerce and Point Of Sales (POS) transactions until the end year. The NPCI stated that the switching fee is waived from 11 November to 31 December. The charges were Rs.0.30 to the card-accepting bank (acquirer) and Rs.0.60 to the card-issuing bank (issuer) for e-commerce and POS transactions.

NPCI CEO and managing director A P Hota stated that the objective is to support banks to activate the existing RuPay cards, issue new cards to un-carded customers and widen the acceptance points. NPCI said that India has around 14 lakh POS terminals with growth in acceptance points. With the right push, 755 million debit card customers can generate approx 50 million card transactions per day from the current level of 5 million transactions.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@clear.in

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