India scales UPI market share cap deadline by two more years

The NPCI’s UPI platform supports real-time payments between individuals or at a merchant’s point of sale. Initially prepared to take effect by the end of 2024, the market share cap for UPI transactions is now set to be enforced at the end of December 2026. First launched in November 2020, the proposed cap limits any digital payment firm’s ability to process over 30% of the total UPI transaction volume. The NPCI underlined that the cap is set to be calculated considering the total volume of UPI transactions over the preceding three months, with it being evaluated on a rolling basis.

Furthermore, the current announcement follows two other extensions offered by the NPCI. According to the NPCI, based on several factors, the timeline for compliance of existing third-party application providers (TPAPs) who are exceeding the volume cap, was delayed by two years. Citing undisclosed sources familiar with the matter, Reuters mentioned that the NPCI’s decision intends to not impede the development of the UPI ecosystem and to also provide other participants in the market with the necessary time to grow.

The initiative is thought to be a reprieve to digital payment platforms, including Google Pay and PhonePe, which process the majority of UPI payments in India. As detailed by Reuters, in November 2024, PhonePe processed 47.8% of UPI payments and Google Pay accounted for approximately 37%. Combined, the two companies managed 13.1 billion transactions during November 2024.  

Scaling India UPI’s reach