No more unlimited payments on Google Pay, PhonePe: UPI apps may enforce daily transaction limits.

The Reserve Bank of India is looking at creating limits for UPI transactions. Google Pay, PhonePe, and other UPI apps will be affected. Users can only do limited daily transactions on these apps

• NPCI is in discussions with RBI on the volume cap limit of 30 percent.
• Currently, there is no volume limit and Google Pay and PhonePe account for over 80 percent of all digital payments.
• NPCI had earlier proposed a 30 percent volume cap for third-party app providers (TRAPs).

A recent IANS report said that the National Payments Corporation of India (NPCI) is currently in talks with the Reserve Bank of India (RBI) to impose transaction limits on Google Pay, PhonePe, and other UPI apps. As a result, users can only make limited daily transactions on these apps. NPCI is responsible for managing digital UPI pipelines and aims to reduce the player volume to 30% by December 31.

A meeting was held between senior members of NPCI, RBI, and senior officials of the Ministry of Finance to ascertain the steps that could be taken shortly. For now, there is no need to bring forward the proposed December 31 deadline. Further, NPCI will reveal its decision on market share implementation by the end of November, giving more clarity on how the new regulations will affect customers.

Why NPCI wants to set up a daily transaction limit?

PhonePe and Google Pay account for 80% of the market share, according to an IANS report. To reduce concentration risk, i.e. the level of risk that arises when all your eggs are in one basket, so to speak, NPCI now wants to reduce it to 30%. This undoubtedly gives other players a chance to thrive by breaking the monopoly of the first movers.

Earlier caps were set by NPCI :

NPCI had earlier issued similar directives, capping the share of transactions in total UPI transactions to 30%. This means that third-party application providers can only process 30% of these transactions. The mandate will be implemented from 1 January 2021 and will be calculated based on the volume of transactions processed in the previous quarter.