Govt to take action to limit Negative Impact on UPI Payment System
Digital payments players like Google Pay, PhonePe, Paytm, and others are in a situation to comply with the rules framed by State run-National Payments Corporation of India also known as (NPCI) which has put a cap to unified payments interface (UPI) transactions for digital payments players. NPCI will be giving three months to payments app to follow these rules from the start of July.
As per the report, the decision was taken early in the month of July which will come to force from April 1, 2021. The guidelines for the same were on the table since last August, the publication further stated that NPCI has brought to the notice of the Apps, to draw a line on any of the payment that happens to cross the 50 % limit of all UPI transactions in the first year of the implementation of the rules in the similar manner 40% should be the limit for the second year and 33% for the third. In case of non-compliance, NPCI will send warnings to the payment Apps and also to the sponsor banks if the transaction near the limit, even if matters get worse NPCI will start imposing a penalty on firms and banks and also send an order to them, to stop onboarding any new customers.
Commenting on the guidelines, PhonePe CEO and cofounder Sameer Nigam added that nobody is near the 50% threshold currently, so these guidelines will not cause any issue at the moment. But the real challenge will begin next year when the limit is reduced to 40%. He added, “UPI is a completely open and interoperable ecosystem by design. There is no barrier to entry to new entrants at all. New players are still entering every day. So why penalize consumers by forcing them to use anything but the best apps/service providers available at any time?”
The success story of UPI
UPI was Launched in 2018 since then the UPI payments have been the most popular digital payment method in India. It has recorded 1.34 Bn transactions worth INR 2,61,835 Cr in June 2020. The success of UPI has made Google suggest the United States Federal Reserve Bank introduce a similar payment system in India. NPCI on the other hand is searching for ways to commercialize the payment system by introducing it in other countries.
Google Pay is the most popular UPI payments platforms with nearly 42% market share which is followed by Flipkart-owned PhonePe with a 35% share, as per the report. The data for Paytm and Amazon Pay has not yet been revealed.
WhatsApp which is a messaging app is also with a plan to find a place in the Indian digital payments domain since 2018.
The company could Finally get NPCI’s approval for its data localization compliance, the platform now is waiting for its green signal from the Reserve Bank of India (RBI) to completely enter the digital payments platform. Currently, the platform is testing with 1Mn users
Need to Limit Transactions
The step towards putting a boundary for transactions came into form when NPCI felt that damage can happen in the Indian payment ecosystem in case there is a collapse. Although this move will result in slowing down the growth of the players operating in the system, still Indian payments ecosystem will stay immune in case UPI collapses.
NCPI came into action after a collapse was recorded for Yes Bank’s and UPI infrastructure too got impacted because of that.“NPCI came in with the understanding that by capping market share, the risk of outages due to ‘one player being too large’ can be mitigated,” a senior executive of a payment firm said, seeking anonymity.
