NPCI Extends UPI Volume Cap Deadline by 2 Years Till Dec 2024
NPCI Extends UPI Volume Cap Deadline by 2 Years Till Dec 2024: The National Payments Corporation of India has extended the deadline for payment aggregators to achieve UPI (Unified Payments Interface) volume criteria by two years, until December 31, 2024.
December 2022 Current Affairs Quiz
What Has Been Said:
“Taking into account the present usage and future potential of UPI, and other relevant factors, the timelines for compliance of existing TPAPs (third party app providers) who are exceeding the volume cap, is extended by two years i.e. till December 31, 2024 to comply with the volume cap,” it said in a circular.
In view of significant potential of digital payments and the need for multi-fold penetration from its current state, it is imperative that other existing and new players (banks and non-banks) shall scale-up their consumer outreach for the growth of UPI and achieve overall market equilibrium, NPCI said.
About The Guideline:
The guidelines, which went into effect in November 2020, required that the UPI volume of transactions initiated through a payment service provider not exceed 30% of the total volume of UPI transactions executed in the preceding three months. While the cap was effective from January 1, 2021, existing players that had a share higher than 30 per cent – such as PhonePe and Google Pay – were given two years to comply with the norms in a phased manner.
Need Of This:
The step was taken to address the risks and protect the UPI ecosystem, NPCI had then said. However, payment aggregators have since argued that it is near impossible to control market share without impacting new customers or slowing down their own business growth, especially if the product and services are being used and preferred by customers.
What The Govt is Saying:
The Reserve Bank of India (RBI) issued a consultation paper on payment system charges, arguing for a tiered charge to be imposed on UPI transactions, similar to Immediate Payment Service (IMPS) transactions. The Central government also said that UPI is convenient and that there were no plans to put any charges on it.
Uncompetitive Nature:
As per latest NPCI data, PhonePe had 47 per cent market share in terms of the volume of UPI transactions in October, whereas Google Pay had 34 per cent share and Paytm around 15 per cent.