Centre to not intervene in deciding deadline for payment platforms' 30% cap

PhonePe and Google Pay approached the National Payments Corporation of India (NPCI) asking for an extension to the December 2022 deadline for at least three years

On conflicting demands by India's top online payment platforms over the implementation of a cap on 30 per cent of market share, the central government has said that IT will not "actively intervene", according to a report in the Economic Times (ET).

Paytm, according to the report, believes that the market cap should be implemented according to the timeline. According to the timeline, the rule will kick in by December 2022. 

On the other hand, PhonePe and Google Pay approached the National Payments Corporation of India (NPCI) asking for an extension to the deadline for at least three years. According to September data, PhonePe and Google Pay have a market share of 46.7 per cent and 33.3 per cent, respectively. 

The government, however, said that the matter will be decided by NPCI and the Reserve Bank of India (RBI). 

"The Government of India cannot be taking sides. Ultimately, there has to be a balance between consumer goods and that of the UPI ecosystem," an official told ET.

"There are not a lot of options left since two players still dominate the network and there is a fear of customer disruption if platforms are asked to stop onboarding new users or stop transactions after a certain limit," another person aware of the matter was quoted as saying in the report. 

In September this year, RBI Deputy Governor T Rabi Sankar said the banking sector regulator was looking to address and find a solution to the issues related to the duopoly created by PhonePe and Alphabet-owned Google Pay.

If the capping rule kicks in, PhonePe and Google Pay may be negatively impacted as they will be required to lower their market share. Other aggregators, like Paytm, Amazon Pay and WhatsApp Pay may be benefitted.