India Delays UPI Market Share Caps, Extending Lifeline to PhonePe and Google Pay

India has delayed the implementation of market share caps for its popular unified payments interface (UPI) by two years, a move that will benefit Google Pay and Walmart-backed PhonePe, as reported by Reuters. The decision, announced Tuesday by the National Payments Corporation of India (NPCI), pushes back the original December 2024 deadline to December 2026.

The market share caps, initially proposed in November 2020, were designed to prevent any single entity from dominating the UPI ecosystem. The original mandate stipulated that no digital payment firm could hold more than 30% of the total transaction volume processed through UPI.

Google Pay and PhonePe currently dominate the Indian UPI market, processing a combined 13.1 billion transactions in November 2024, according to regulatory data. PhonePe held a 47.8% market share in November, while Google Pay commanded 37%.

“The decision to delay the market share cap is aimed at not hindering the growth of the UPI ecosystem while also giving other players the time to grow," a source familiar with the discussions told Reuters. The NPCI has not yet responded to requests for comment.

In a separate announcement, the NPCI also lifted a cap on the number of users that WhatsApp Pay can onboard. This move is expected to boost competition in the UPI space.