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India will not implement a market share cap on UPI until 2025, favouring Google and Walmart in the process

Analysts have hailed India’s stunning decision to delay enforcing a restriction on market share for businesses operating on the domestic payments network until December 31, 2024 as a huge gain for Google Pay and Walmart’s PhonePe.

To give current participants time to comply with the guidelines, the National Payments Corporation of India, the payments organisation that manages the Unified Payments Interface payments network, announced the move on Friday.

Given the “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,” the report stated.

NPCI initially planned to apply the market cap limits in January 2021, but has extended the schedule multiple times since. It originally felt the necessity to apply a market cap check to handle the “risks” and “protecting the UPI ecosystem as it progressively scales up.”

UPI is a payments infrastructure established by significant banks in India and is sponsored by the Indian government. It has been the most popular digital payments option in the country in recent years.

With over 80% of the UPI market, PhonePe and Google Pay are unrivalled. Paytm and other competitors had hoped that the National Payments Corporation of India (NPCI), a subsidiary of the country’s central bank, would roll out the rail-guards much sooner, so the new move is seen as a loss for them.