UPI market share cap in limbo

BENGALURU: With the Reserve Bank of India (RBI) blocking WhatsApp's payments business launch over non-compliance with the data law, the proposal to limit market shares up to 33% for each player on the Unified Payments Interface (UPI) is being put on the back burner, two people aware of the matter said.
Before the Israeli spyware 'Pegasus' controversy, in August, a proposal to cap the maximum market share for each app on UPI was discussed in the steering committee meeting of the National Payments Corporation of India (NPCI). This triggered a debate on the dominance of players like Google Pay and the much anticipated arrival of WhatsApp on the network.

The issue might only be picked up later next year as WhatsApp's payments ambitions have virtually been thwarted. While Google Pay continues to lead the transaction volumes on UPI, industry players were apprehensive of WhatsApp's entry on the network, especially since it has 400 million monthly active users.

TOI reported in its November 8 edition that the central bank had told the Supreme Court that the Facebook-owned WhatsApp is still non-compliant with data-localisation norms and that it would not be allowed to launch full-scale payments here, before the company is fully compliant.

"With WhatsApp being in this situation, they (NPCI) have got time now, it can wait. Members were largely concerned over disruption by new entrants like WhatsApp," a person aware of the matter said.

Google Pay, PhonePe and Paytm are the three most prominent players on UPI, accounting for 80-90% of transactions. UPI recorded a total of 1.15 billion transactions in October. WhatsApp Pay is restricted to 1 million users in beta mode since February 2018.

While WhatsApp's threat on existing players was not cited as a reason for a proposal like limiting market share, multiple industry executives said it was one of the core aspects for the move, questioning the monopoly of a single app on the platform. An email sent to NPCI did not elicit any response on the matter.

"Even the initial public feedback of the proposal was critical of the move since people mentioned 'free market' policy. That too needs to be looked at, but WhatsApp being blocked has eased the urgency on the matter," one of the people quoted earlier said.