Payment Corporation rolls out new process for monitoring Google Pay, UPI apps market cap

The National Payments Corporation of India (NPCI), which oversees digital payments in the country including those for entertainment and gaming platforms like online casinos, has come up with a set of guidelines on capping the market share of third-party Unified Payments Interface (UPI) application providers.

No monopoly for UPI providers

The use of the UPI network has been on the rise in the past year, accounting for 2 billion monthly transactions in November 2020, according to the NPCI. This is not surprising given that more and more people are opting to pay for goods and services digitally—especially with the current restrictions brought about by the ongoing COVID-19 pandemic. It goes without saying that in these recent times, digital payments have become an essential component within online businesses, even for entertainment platforms such as PureWin where Indian players can play online casinos in India.

With this in mind, the NPCI wants to ensure that there is no monopoly in the UPI network—first by capping the market share at 30 percent, and now by rolling out a Standard Operating Procedure (SOP) that outlines the actions the government will take if a third party UPI player crosses the threshold.

“Currently with over 500 million smartphones, 1.2 billion Aadhaar users and 1 billion mobile phones, it is possible to increase the UPI user base to five times (5X) in the next three (3) to five (5) years, aspiring to achieve a billion transactions a day on this fully interoperable platform that UPI is. Truly, UPI has the potential to be one of the first of its kind with the fully interoperable systems, and with participation of the banks and fin-techs collaborating together,” the NPCI said in a statement.

Currently, two UPI providers already enjoy a market share of more than 30 percent before the regulation went into effect in January 2021—Google Pay and PhonePe, which has close to 40 percent of market share. These two have two years to comply with the policy, and the NPCI will conduct a bi-annual compliance review from January 2022.

Other providers like Amazon Pay and WhatsApp Pay can aim for a larger transaction volume. WhatsApp launched its payments feature in December 2020 with support from banks including the State Bank of India (SBI), HDFC Bank, ICICI Bank, and Axis Bank.

Here’s how the SOP works

Via its SOP, the NPCI laid out the warnings and subsequent penalties for three different levels.

Level 1 involves UPI app providers with between 25-27 percent of monthly market share. The NPCI will send an “alert” to the third-party app provider and its payment service provider bank, and they are required to “acknowledge” the said alert.

UPI app providers with market share between 27.1 percent to 30 percent and their partner banks will receive a second alert—this is part of Level 2—and they must provide “evidence” that they are taking action in order to restrict their market share.

Finally, for UPI apps with over 30 percent market share, NPCI will direct the app and the bank to stop onboarding new customers. The third party app and the bank are also required to show NPCI what they’re doing to meet the threshold.

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