The National Payments Corporation of India (NPCI) has extended by two years the deadline to comply with its 30 percent cap on the market share of platforms operating on the Unified Payments Interface (UPI).

What is UPI?

• Unified Payments Interface (UPI) is an instant real-time payment system developed by National Payments Corporation of India (NPCI) facilitating inter-bank transactions.
• The interface is regulated by the Reserve Bank of India (RBI) and works by instantly transferring funds between two bank accounts on a mobile platform.

What is the NPCI plan for UPI?

• NPCI had initially planned to enforce the market cap rules in January 2021.
• It aimed to limit any single payments app from processing more than 30 per cent of UPI transactions in a month.

Why extension?

• The extension is being seen as a major relief for Walmart and Flipkart-backed PhonePe and Google Pay, which currently command a majority of the UPI market share.

How could it impact UPI platforms?

• Industry analysts believe the move comes as a shot in the arm for PhonePe and Google Pay, which collectively control more than 80 per cent of UPI’s market share.
• For platforms like Paytm and WhatsApp Pay, however, the extension could be seen as a natural loss.
• As of October, Paytm had a market share of 15 per cent on UPI.
• In comparison, PhonePe had a 47 per cent market share, while GooglePay accounted for around 35 per cent.

How is UPI performing?

• According to the Reserve Bank of India’s Payment Vision 2025, UPI is expected to register an average annualized growth of 50 percent.
• After touching a new high of Rs 12.11 lakh crore in October, the UPI transaction value for the month of November came in at Rs 11.90 lakh crore.
• However, the transaction count at 7.3 billion in October remained the same in November.

Try this PYQ:

With reference to digital payments, consider the following statements:

1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.

Which of the statements given above is/ are correct? (CSP 2018)

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

 

Post your answers here.

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