NPCI Extends Market Cap Deadline for UPI Apps

• 03 Jan 2025

Source: LM 

Recently, the National Payments Corporation of India (NPCI) extended the deadline for Third-Party App Providers (TPAPs) to comply with the 30% transaction cap on UPI transaction volumes till 31st December, 2026. 

• This decision impacts major TPAPs like PhonePe and Google Pay, which collectively hold over 80% of UPI transactions.  
  • To comply with the 30% cap, TPAPs exceeding the limit must halt onboarding new customers. 
• Background: In November 2020, NPCI introduced a cap of 30% on UPI transaction volumes per TPAP to mitigate concentration risks and ensure a balanced ecosystem. However, the deadline was extended in December 2022. 
  • The cap is based on the average UPI transaction volume over the past three months, with existing TPAPs exceeding the cap given two years to comply in phases. 
• NPCI: It was established by RBI and Indian Banks' Association under the provisions of the Payment and Settlement Systems Act, 2007.  
• TPAPs: They are entities that offer UPI-based financial services through mobile apps or platforms, acting as intermediaries between users and banks (referred to as sponsor banks).  
  • TPAPs are not part of banks or financial institutions. 

Read More: UPI Payments: Empowering Users, Challenging Banks