Growth restrictions

Limits on digital payments should be avoided

The National Payments Corporation of India (NPCI) did well last week to postpone the deadline for imposing a volume cap on third-party application providers (TPAPs) by two years. This would give the NPCI another opportunity to evaluate the basic idea of imposing it. Although entities engaged in the business were demanding a five-year extension, imposing arbitrary caps should be avoided. In November 2020, the NPCI came up with the idea of imposing a 30 per cent cap on volumes handled by a TPAP on the unified payments interface (UPI). The limit was to be calculated on volumes handled in the previous three months on a rolling basis, and TPAPs exceeding the 30 per cent limit were given until January 2023 to comply. Compliance with this would have meant that entities with more than a 30 per cent volume share would have had to decline transactions from existing customers.

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