NPCI Plans to Limit Digital Payments Via Major UPI Platforms


Digital payments have revolutionized the way we conduct transactions in our daily lives. The convenience offered by apps like Google Pay and PhonePe has made digital payments a preferred choice even for small transactions like buying a samosa from a local bakery. However, the National Payments Corporation of India (NPCI) has raised concerns about the dominance of these platforms in the market and its potential impact on the balanced growth of Unified Payments Interface (UPI) services.

As of now, there are no restrictions on the number of daily transactions one can make through UPI platforms like Google Pay and PhonePe. This has led to these apps processing a significant majority of digital payments in India, contributing to over 80% of all UPI transactions. While this has undoubtedly fueled the popularity of UPI-based payments, NPCI is wary of the implications of such concentrated dominance.

NPCI is contemplating the introduction of a transaction cap for individual UPI apps to address this issue. The rationale behind this move is to encourage users to explore and utilize other UPI platforms, thereby fostering a more competitive environment in the digital payments space. Moreover, NPCI aims to mitigate the risks associated with over-reliance on a couple of platforms, especially in scenarios where technical glitches or disruptions may occur.

The proposed transaction cap model suggests that no single UPI app should facilitate more than 30% of the total UPI transactions on any given day. This approach ensures that users have the flexibility to diversify their transactions across multiple platforms, reducing dependency on a single app. Additionally, some banks have taken proactive measures by implementing their own transaction limits, capping daily transactions at Rs 1 lakh per day.

By imposing such limits, NPCI intends to level the playing field for all UPI service providers, encouraging healthy competition and innovation. This move is also strategic in challenging the dominance of foreign-owned UPI apps and promoting the growth of indigenous digital payment solutions.

While the specifics of the transaction cap are still being deliberated, this development underscores the evolving landscape of digital payments in India. It highlights the regulatory efforts to ensure a fair and inclusive ecosystem where various players can thrive, ultimately benefiting consumers with improved services and choices.

NPCI’s initiative to limit digital payments via major UPI platforms reflects a proactive approach to promote diversity, competition, and stability in India’s digital payment ecosystem. As the discussions progress and regulations take shape, stakeholders across the financial sector will need to adapt and innovate to meet the evolving needs of consumers and businesses in the digital era.

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