Good news for PhonePe and Google Pay: Last Date to impose 30% Limit on UPI Apps has been Extended by 2 years
There is a good news for PhonePe and Google Pay. The National Payments Corporation of India (NPCI) has decided to postpone the enforcement of market share caps for Unified Payments Interface (UPI) payment apps by two years, moving the deadline to December 2026. This move brings relief to major players like PhonePe and Google Pay, which currently dominate the UPI ecosystem in India.
Why Was the Market Cap Rule Introduced?
Introduced in 2020, the market cap rule aimed to limit any single UPI payment app to a 30% market share. This means that the UPI app can have a customer base of only 30% if this rule gets implemented. The objective was to foster competition, prevent monopolies, and ensure a balanced digital payments ecosystem.
However, implementing this rule now would have disrupted the operations of leading platforms like PhonePe, which holds a 47.8% market share, and Google Pay, which accounts for 37%. These apps collectively cater to millions of users, making an immediate cap potentially disruptive.
UPI Apps Market Share as of Nov 24
| Sr. | UPI App | Volume (Mn) | Value (Cr) |
|---|---|---|---|
| 1 | PhonePe | 7,401.93 | 10,88,635.03 |
| 2 | Google Pay | 5,739.12 | 7,64,639.66 |
| 3 | Paytm (OCL) | 1,075.09 | 1,18,004.06 |
| 4 | Navi | 152.95 | 8,806.45 |
| 5 | Cred | 138.24 | 50,560.48 |
| 6 | Axis Bank Apps | 130.36 | 6,337.84 |
| 7 | super.money | 78.49 | 3,130.10 |
| 8 | Amazon Pay | 71.60 | 7,914.87 |
| 9 | FamApp by Trio | 67.41 | 777.46 |
| 10 | ICICI Bank Apps | 53.71 | 21,498.14 |
| 11 | 51.76 | 3,890.10 | |
| 12 | Kotak Mahindra Bank Apps | 47.35 | 6,583.09 |
| 13 | HDFC Bank Apps | 36.84 | 10,417.27 |
| 14 | Yes Bank Apps | 35.69 | 9,215.09 |
| 15 | BHIM | 27.05 | 8,210.65 |
| 16 | Airtel Payments Bank Apps | 18.60 | 1,389.73 |
| 17 | Mobikwik | 16.63 | 2,942.38 |
| 18 | Flipkart UPI | 13.25 | 636.91 |
| 19 | Groww | 13.22 | 8,479.87 |
| 20 | Slice | 11.54 | 845.13 |
Strategic Reasons Behind the Extension
The extension is seen as a strategic move by NPCI to stabilize the UPI ecosystem while addressing market dominance concerns. The decision gives emerging players more time to establish themselves and compete effectively in the growing fintech landscape.
Additionally, NPCI has removed the 100-million-user cap on WhatsApp Pay, allowing the Meta-owned platform to expand its reach in the Indian digital payments market. This move is expected to intensify competition and encourage innovation.
UPI’s Rapid Growth in India
India’s UPI ecosystem has witnessed remarkable growth, with transaction volumes rising by 46% in 2024 to reach 172 billion, compared to 118 billion in 2023. This surge underscores UPI’s critical role in India’s digital economy and highlights the need for measured regulatory adjustments to maintain growth momentum.
What’s Next for UPI Apps?
With the deadline extended, leading platforms like PhonePe and Google Pay have additional time to adapt, innovate, and diversify their offerings. The delay also encourages collaboration between established and emerging players, potentially benefiting consumers with enhanced services and better options.
Future Outlook
As the UPI ecosystem evolves, the extended timeline offers an opportunity to balance market dynamics while maintaining the platform’s robust growth. This move could pave the way for a more competitive and sustainable digital payments environment, ensuring long-term stability and innovation in India’s fintech sector.
