Here’s how Google Pay, PhonePe and other UPI apps may change after new NPCI rule – Times of India


National Payments Corporation of India (NPCI) has announced new rules to put a cap on the volume of transactions a particular UPI app can process. As per NPCI, there will be a 30% transaction volume cap on the number of transactions one UPI app can process to protect the “UPI ecosystem”. In other words, this move will prevent any one particular UPI app to be market leader . This move will also impact you as users in the long run but there may not be any immediate change in the way you use UPI apps.
Google Pay, PhonePe, Paytm and Amazon Pay command over 97% UPI market share
There are 21 third party UPI apps in India including WhatsApp Payments. However, PhonePe, Google Pay, Paytm and Amazon Pay are the major UPI players in the market. The majority of UPI transactions, as high as 80% of the total UPI volume, are driven by either PhonePe or Google Pay. PhonePe reportedly recorded 835 million (approx) UPI transactions in October 2020 while Google Pay claimed around 820 million. Paytm and Amazon Pay are distant third and fourth players with around 245 million and 125 million transactions respectively.
In October 2020, UPI announced that it had recorded 2,071.62 million transactions out of which around 1,655 million transactions were done either on Google Pay or PhonePe. If you add Amazon Pay and Paytm then the number stands at around 2,025 million transactions. This means over 97% UPI transactions were done on just four apps and less than 3% transactions were done on the 17 other UPI apps.
Now, with the new 30% cap rule, NPCI will not allow these four players to dominate the market and will allow other UPI apps to have a level playing field.
What’s the 30% transaction cap rule?
NPCI has mandated that third party UPI apps cannot exceed 30% of the overall volume of transactions processed in UPI during the preceding three months (on a rolling basis) starting from January 1, 2021. Thankfully, NPCI is giving a breather to the four largest players– Google Pay, PhonePe, Paytm and Amazon Pay along with other UPI apps and has said that the existing third party UPI apps who are exceeding the cap will have a period of two years from aforesaid date to comply with the same in a phased manner.
This means for a new UPI app there’s a limit of 30% for the number of transactions it can process. So, for example with WhatsApp rolling out WhatsApp Payments in India, it cannot become a market leader as it has to cap the volume of transactions to 30% of the total volume of UPI transactions. As for Google Pay and PhonePe, both will have to reduce the number of transactions.
How will it affect users and how UPI apps may change?

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If there’s a restriction on the number of transactions, it goes without saying there will be more failed transactions and also market leaders like Google Pay, PhonePe and others will have to set transaction limits for users.
These limits may be set in various forms. For example, UPI apps may mandate that you can only do 5 transactions per day. Or, there could be limits that will force you to stick to only one UPI transaction per hour. Another example could be, some apps may even put cash limits which will allow you to only pay via UPI if the amount is above a certain value like Rs 2,000 or Rs 1,000.
Not to forget, you may have to download multiple UPI apps even if you don’t like to carry on using UPI. For example, if you are just using Google Pay or PhonePe for regular needs, you will be forced to use UPI apps like Samsung Pay, Mi Pay, Cred, Mobikwik, TrueCaller and other apps continue using UPI for digital payments.
It would be interesting to see how Google Pay and PhonePe react to this new rule as they own the bulk majority of UPI transactions in India. Having said that, don’t expect any changes very soon as NPCI has given a timeline of up to two years for all UPI apps to comply.



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Sagar Biswas

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