Paytm, PhonePe, GPay & Other UPI Apps May Impose Transaction Limits

The freedom of doing unlimited transactions on UPI apps like Paytm, PhonePe, GPay & others may be over soon. The NPCI is in discussion with the RBI.

Paytm, PhonePe, Google Pay, and other UPI payment apps may eventually place a limit on the transaction. Users may soon lose access to unlimited UPI payments using payment apps.

The Reserve Bank’s recommended deadline of December 31 for capping participant volume at 30% is being discussed with the National Payments Corporation of India (NPCI), which manages the UPI digital pipeline.

There is presently no volume cap, and around 80% of the market is made up of Google Pay and PhonePe.

In November 2022, NPCI recommended a 30% volume cap for third-party app developers to reduce the risk of concentration (TPAP).

A discussion has already been held to examine every angle in detail. Senior representatives from the finance ministry and the RBI joined the NPCI officials at this meeting.

Because the NPCI is still weighing all of its possibilities, no definitive decision about the extension of the December 31 deadline has been made.

However, the NPCI is anticipated to decide on the introduction of UPI market cap before the end of this month.

On January 1, 2021, NPCI issued a directive capping the percentage of transactions that a provider of third-party applications could handle at 30% of the volume of transactions processed on UPI. 

This percentage was determined based on the volume of transactions completed in the three months prior.

The NPCI is currently considering all options, and no decision has been made to officially extend the deadline of December 31. 

The corporation has also gotten recommendations to extend the deadline from stakeholders.

In a consultation paper on fees in payment systems published earlier this year, the Reserve Bank of India (RBI) argued that UPI transactions should be subject to a tiered fee structure similar to that of Immediate Payment Service (IMPS) transactions. 

The Central government also claimed that UPI is practical and that no plans exist to impose any fees.