The market share caps, set to take effect by the end of 2024, will now be implemented at the end of December 2026. Credit: Arnav Pratap Singh/ Shutterstock.

The National Payments Corporation of India (NPCI) has postponed the enforcement of market share cap for unified payments interface (UPI) transactions by two years. 

This market share cap, initially set to be effective by the end of 2024, will now be implemented at the end of December 2026. 

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The NPCI’s UPI platform facilitates real-time payments between individuals or at merchants’ points of sale. 

The proposed cap, first introduced in November 2020, restricts any single digital payment firm from processing more than 30% of the total UPI transaction volume.  

The NPCI’s statement indicated that the cap will be calculated based on the total volume of UPI transactions over the preceding three months, evaluated on a rolling basis. 

This is the third extension provided by the NPCI. 

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In a circular, NPCI said: “Considering various factors, the timeline for compliance of existing third party application providers (TPAPs) who are exceeding the volume cap, is extended two years i.e. till December 2026,” reported The Hindu Business Line. 

This move said to be a respite to digital payment platforms such as Google Pay and Walmart-backed PhonePe. 

As of November 2024, PhonePe held a 47.8% share of UPI payments, while Google Pay accounted for 37%, Reuters stated based on regulatory data.  

Together, these two companies processed 13.1 billion transactions in November alone.  

“The decision to delay the market share cap is aimed at not hindering the growth of the UPI ecosystem while also giving other players the time to grow,” reported Reuters citing undisclosed sources.  

Meanwhile, recently, the Reserve Bank of India (RBI) allowed prepaid payment instruments (PPIs) to conduct UPI transactions through third-party mobile applications.