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BENGALURU: A day after National Payments Corporation of India (NPCI) announced a market cap of 30% for players providing Unified Payments Interface (UPI) service, market leader Google Pay has said the move is likely to impact further adoption of UPI in the country.

On Thursday evening, NPCI said it has given the much-awaited approval to WhatsApp Pay, allowing the service to launch in a graded manner starting with a maximum registered user base of 20 million in UPI.

Simultaneously, the retail payments organisation announced a cap of 30% on transaction volume clocked by a player starting 2021. This 30% cap will be calculated on the total volume of transactions processed in UPI during the preceding three months.

The existing player or third party app providers (TPAPs) exceeding the specified cap, will have a period of two years from January 2021, to comply with the same in a phased manner.

Google Pay has now hinted that NPCI’s intervention through market cap should be reconsidered, as Indian consumers need to be provided with a ‘choice’ for making digital payments.

“Digital payments in India is still in its infancy and any interventions at this point should be made with a view to accelerate consumer choice and innovation. A choice based and open model is key to drive this momentum. This announcement has come as a surprise and has implications for hundreds of millions of users who use UPI for their daily payments and could impact the further adoption of UPI and the end goal of financial inclusion," said Sajith Sivanandan, Business Head, Google Pay and Next Billion User initiatives, India.

In an earlier interaction with Mint, PhonePe founder Sameer Nigam echoed a similar sentiment, stating that market cap on UPI goes against the principle of it being an ‘open and interoperable’ infrastructure.

“UPI is a completely open and interoperable ecosystem by design. There is no barrier to entry to new entrants at all. New players are still entering every day. So why penalize consumers by forcing them to use anything but the best apps/service providers available at any time?" said Sameer Nigam, co-founder and CEO, PhonePe, on the upcoming market-capping guidelines, in an earlier interaction with Mint.

On Friday, Facebook chief Mark Zuckerberg in a video message said that with Unified Payments Interface (UPI), India has created something ‘truly special’, which will open up a world of opportunities for micro and small businesses that are the backbone of the Indian economy.

WhatsApp which is working to make payments live on its platform today, will be available in 10 regional languages, as it partners with 5 Indian banks—ICICI Bank, HDFC Bank, Axis Bank, the State Bank of India, and Jio Payments Bank, to launch this service.

Facebook-owned WhatsApp has been running its UPI-based payment system, WhatsApp Pay in Beta since 2018, with 1 million users. One of the biggest hurdles for the platform, continued to be the Reserve Bank of India’s (RBI) data localisation norms for payment providers in the country, which the company had to comply with.

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