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NPCI to alert UPI entities near 30% cap, may give exemptions
- On crossing the 30% mark, third party-apps and their partner banks will have to stop onboarding new users with immediate effect. The NPCI has, however, said it may offer exemption to players based on justifications provided
BENGALURU: The National Payments Corp. of India (NPCI) has defined its standard operating procedure on the 30% market cap on Unified Payments Interface (UPI) transactions for third-party app providers (TPAPs).
The limit of 30% will be calculated on the basis of total volume of transactions processed on UPI during the preceding three months by a player, on a rolling basis, starting 1 January 2021. Players have until December 2023 to comply with the market cap norms on UPI.
According to the communication, NPCI shall trigger a first alert through an email or a letter to a third-party payment provider and its partner banks, after their market share, in terms of total UPI transactions, hits the 25-27% threshold. Players will have to acknowledge this alert from NPCI.
A second alert will be sent by the retail payments organization once a player hits 27-30% of total market share, with the entity having to provide evidence to NPCI of the actions undertaken to comply with market volume cap.
On crossing the 30% mark, third-party apps and their partner banks will have to stop onboarding new users with immediate effect. However, NPCI stated that it may offer exemption to players, based on justifications provided.
“Upon breach of threshold(s), basis request by third-party app provider (TPAP) through their PSP (partner) banks, there will be a provision to exempt the players to some extent when the volume cap is reached. Such exemption may last maximum up to 6 months unless specifically further extended,” NPCI said.
Mint was the first publication to report on NPCI’s market cap and its penalties in its 30 July edition.
During exemption, the third-party app will be asked to immediately moderate the on-boarding of customers. Exempted players will also have to submit a plan on how they look to correct the market cap breach. The plan should reach NPCI in 5 working days from the date of communication regarding the breach, the retail payments organization said.
In case of a moderated on-boarding after breaching the cap, payment providers and their partner banks will have to inform new customers, NPCI said. Apart from halting new customer onboarding, NPCI may also impose additional penalties on players for non-compliance, according to two industry executives.
“Notwithstanding the contrary contained in the standard operating procedure, NPCI is authorized to penalize the non-compliant TPAP under provisions of the UPI procedural guidelines, as may be issued from time to time. Any other compliances as imposed by NPCI, RBI, government or other regulatory body needs to be adhered to irrespective of the position on the market cap,” said NPCI in a circular sent to digital payment firms. It said that it would review operating procedures around UPI every 6 months, to ensure the objectives are met without customer inconvenience.
In February 2021, PhonePe continued its market leadership and processed close to 975.5 million transactions, garnering close to 42.5% market share, widening the gap with competitor Google Pay by 147.6 million transactions.
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First Published:26 Mar 2021, 03:32 PM IST
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