The National Payments Corporation of India (NPCI) has extended the deadline for Unified Payments Interface (UPI) to meet the market cap deadline of 30% to December 31, 2024. The earlier deadline to meet the market cap norms was December 31, 2022.



  • In November 2020, the NPCI issued guidelines capping the share of transactions handled by a third-party application providers (TPAPs) at 30% each.
    • TPAPs refer to the Application Programming Interface (API) designed in UPI exclusively for banks.
    • These are either standalone applications or applications that add functionality to an existing parent program / system.
    • In the financial space, third party apps are often connected to a banking application to provide a variety of services.
  • The norms aimed to reduce any single-point failure risk by ensuring that UPI volumes do not get concentrated in the hands of a few players.
    • In March 2020, when Yes Bank was placed under moratorium, PhonePe had to work overnight to switch banks as its transactions were handled by UPI.



  • Payment apps PhonePe and Google Pay have received a breather, with the NPCI giving them two more years to comply with guidelines on volume caps.
    • Flipkart-owned PhonePe and Google Pay have 47% and 33% market share respectively.
  • If NPCI enforced the caps immediately, it would result in UPI transactions shrinking dramatically. Hence, it has extended the deadline for two years.


Criticism of guidelines on volume caps

  • Analysts protested the idea because there is no way for any market participant to reduce their own market share without actively denying service to the end customer.
    • E.g., PhonePe has a market share of 47%. To reduce UPI market share to 30%, it would be forced to deny UPI payment services to crores of Indians.
  • As per the guidelines, the burden is on other existing and new UPI players to invest more time, effort & money to increase their own UPI market share.
  • Failing that, the organic market share of participants in the UPI industry will not change significantly, and NPCI will have to keep extending the market cap indefinitely.


About NPCI

  • NPCI is an umbrella organisation for operating retail payments and settlement systems in India.
  • It is an initiative of RBI and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
  • The objective of NPCI is to create a robust Payment & Settlement Infrastructure in India.
    • For this, NPCI was incorporated as a “Not for Profit” Company.


About Unified Payments Interface (UPI)

  • UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank).
  • It does so by merging several banking features, seamless fund routing & merchant payments into one hood.
  • In other words, UPI is an interface via which one can transfer money between bank accounts across a single window.
  • It was launched in 2016, by the National Payments Corporation of India (NPCI).