In a notification published by the NPCI, it allowed WhatsApp to double the number of users on its payment service from 20 Mn to 40 Mn.
According to an earlier notification issued by the body, no third-party payment application is allowed to monitor more than 30% of the transactions that occur on the UPI platform.
Even though PhonePe and Google Pay respectively capture 47% and 34% of the market, they therefore have until December 2023 to comply with the restriction.
The National Payments Corporation of India (NPCI) has enabled WhatsApp to double the number of users on its payments platform in India to 40 million people, according to a Note NPCI.
Previously, the Facebook-owned instant messaging service asked the government to remove the user cap from its payment service. Now the NCPI has agreed to increase its number of users which is currently capped at 20 Mn, to be developed gradually.
The NPCI is an organization that manages retail payments and settlements in India. He created a payments and settlements ecosystem that includes RuPay card, Unified Payment Interface (UPI), Bharat Payment Interface (BHIM), BHIM Aadhaar, National Electronic Toll Collection (NETC Fastag) and Bharat BillPay .
According to a notification published in November, third party application providers (TPAP) such as Google Pay, PhonePe, etc. would not be allowed to process more than 30% of the total volume of transactions made through UPI interfaces. This restriction seems to aim to avoid the formation of an oligopoly and to promote competition.
PhonePe supported by Flipkart and Google Pay from Google currently owns 47% and 34% market share for UPI payments but they were allowed until December 2023 to bring it below the 30% threshold set by the NCPI. This restriction is also the reason why WhatsApp cannot leverage its more than 500 million users in the country to increase the adoption of Whatsapp Pay.
According to the standard operating procedure (SOP) published in the notification, the volume of transactions through each TPAP will be controlled by limiting user onboarding. If the market share of a single TPAP reaches the threshold of 35-37%, the NCPI will trigger a first alert h = by e-mail or letter sent to a third-party payment provider and its partner banks; these institutions must acknowledge receipt of this alert.
Once a TPAP achieves a 27-30% market share, a second alert will be issued and the entity involved will need to provide evidence that action has been taken to comply with the market capitalization restriction. Once the 30% mark is crossed, these applications must immediately stop integrating users.
Based on the current scenario, where the two biggest players have two more years to implement the market share cap, and where WhatsApp Pay, the new entrant, is capped at just 40 million users, it looks like the market will maintain its status quo. .