Digital payments gained a lot of speed & zeal after the year 2014 when the ruling party started it’s mission to integrate and create the paper less economy. Thereafter; a lot of payment wallets & services emerged to serve the customers and provide them the needed convenience any time & any where.
National Payments corporation Of India has recently come up with new guidelines with respect to the market share of UPI apps. To know more; let’s get into details.
The National payments Corporation Of India is the top most authority that keeps an eye on payments & settlement systems in the country. It was started by the central bank of the country and Indian Bank’s Association under the requisite act.
The major objective is to set up an infrastructure for the entire banking system especially the payment that come under the electronic scanner. The major promoters are State Bank Of India, ICICI Bank, HDFC Bank, Citibank, HSBC and major financial players in the market. The journey has been quite significant as it got its main brand name from the Prime Minister’s Jan Dhan Yojana. The major popular products & services are:
- Immediate Payments Services (IMPS)
- National Automated Clearing House (NACH)
- Aadhar Payment Bridge System (ABPS)
- Aadhar Enabled Payment Services (AePS)
- National Financial Switch (NFS)
- Unified Payments Interface (UPI)
- Bharat Bill Payment System
- National Electronic Toll Collection (NETC)
Last year there were more than 20 million UPI transactions that were close to 35 million in terms of amount making it very clear that people trust the authority.
19.92 million new users have been seen on BHIM UPI since July 2020 that made transactions of 521.46 million.
INSIGHT INTO THE NEW GUIDELINE
The payments corporation has taken a decision to bring the competition to a stoppage by bringing parity in the entire ecosystem. Therefore, they took a decision to put a cap to the market share of the transactions up to 30%. The association clearly underlined the fact that the exponential rise in UPI volumes would definitely increase the competition.
- The cap guideline clearly means that no payment provider will be having the option to process over 30% of all the transactions.
- From the year 2021; a 3-month cycle would be followed which will contain three level monitoring.
- Any app that will be close to breach 25% of market will receive an alert and they have to acknowledge that once it reaches 27%.
- After that; the app will be responsible to come out with an evidence as to how & why the volumes are so large.
- When the limit of 30% would be reached; the app will be liable to stop onboarding & provide undertaking to the association.
“The design principle used in this is to control the volume cap by means of user on-boarding on the Third Party Application Provider’s payment platform,” NPCI mentioned in a circular issued to all TPAPs and PSPs.
The major players GooglePay & PhonePe both in total have a market share of 40%. This decision is a signal that the market is no one’s kingdom. The players have to maintain a healthy competition in order to make it a good place for the consumers. The best interest of the users is the top most priority for the top most authorities.