NPCI Plans To Limit Digital Payments Via Major UPI Platforms

Digital payments have become a crucial part of our daily lives. It's hard to imagine a day without using apps like Google Pay or PhonePe. These platforms have made it so easy that even for small purchases, like a samosa from a local bakery, we prefer using UPI. But the National Payments Corporation of India (NPCI) has noticed that Google Pay and PhonePe are dominating the market a bit too much. This could soon pose a problem for UPI's balanced growth.

NPCI is considering setting a limit on the number of transactions one can make through these apps. Currently, there's no cap on daily UPI transactions, allowing Google Pay and PhonePe to process most of India's digital payments. This unlimited transaction feature has been beneficial for UPI's popularity. However, the issue arises with the fact that over 80% of all UPI transactions are conducted through just these two apps. This dominance is what NPCI believes is hindering the growth of other Indian UPI applications.

If Google Pay or PhonePe were to experience technical issues, nearly three-quarters of UPI users would be unable to make payments. This could also cause disruptions in overall banking operations. By introducing a transaction cap per app, NPCI aims to encourage users to explore other apps. This move is expected to level the playing field in the market and motivate more Indian apps to improve their features. It's also seen as a strategy to challenge foreign-owned UPI apps like Google Pay.

The specifics of the transaction cap are still under discussion. One proposal suggests that no single UPI app should handle more than 30% of total UPI transactions in a day. This rule would apply per app, meaning users could still make additional payments using different platforms. Meanwhile, some banks have taken the initiative to set their own limits, restricting transactions to Rs 1 lakh per day.