How UPI transactions will be affected after the new NPCI rule of 30% UPI cap


National payments Corporation of India (NPCI) has announced new rules that put a cap on transactions on a particular UPI application that could process. There will be a 30% transaction cap on the number of transactions one UPI application can operate to further protect the UPI ecosystem that will prevent one particular UPI application to lead in the market. The new rules will take place from January 2021.

Google Pay, PhonePe, Amazon Pay holds 96% UPI market share in India. There are more than 20 third party UPI application in India and newly launched WhatsApp payments. Google Pay, PhonePe, and Amazon Pay have up-to 75% UPI transaction volume that majorly affects other UPI applications such as Paytm, Mobikwik, and many more. PhonePe reported a record of 837 million{approx} UPI transaction in October 2020, Google pay also reported 823 million{approx} transactions, Amazon Pay reported around 127 million transactions, and Paytm reported around 241 million transactions. There were 2,072 million transactions recorded in October 2020 out of which 1,655 million were processed on Google Pay and PhonePe and Amazon processed around 370 million transactions which means more than 95% of UPI transaction was processed on these well-known applications and less than 5% of transactions were proceed using other UPI applications.

What is the 30% transaction cap? How will the 30% transaction cap change UPI applications and how it will affect users?

NPCI announced that third party UPI apps will no longer exceed 30% volume of transactions processed through UPI. This means there a limit of 30% of the number of transactions that can be processed for example the new WhatsApp payment has cap the volume of transactions to 30% of the total volume of UPI transactions. But for Google Pay and PhonePe the number of transaction that can be processed will be reduced the applications will set transaction limits for users for example UPI apps may only be able to do 5 transactions per day or only one transaction per hour because of this users may have to download multiple UPI apps like Mi pay, Cred, Mobikwik, Paytm, Truecaller and many more.

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