Google Pay, PhonePe, and Paytm will be in trouble, what will be the effect on you? | Third- Party Payment Apps.

 

Google Pay, PhonePe, and Paytm will be in trouble, what will be the effect on you?

 

The difficulty may increase for payment apps like PhonePe and Google Pay. These apps dominating the UPI payment market may have to reduce their business. Talks are on between the Reserve Bank of India and the National Payments Corporation of India (NPCI) to impose an upper limit of 30% on UPI payments through third-party apps.

 

There is a deadline of 31 December 2022 to implement this capping. That is if this decision is implemented and this rate is followed, then from next year, you may have to lose your kingdom in UPI payment through Phone Pay and Google Pay. But it is not that only the companies will be affected by this decision. This can create many problems for a common consumer.

 

Now you will ask what is the end of this round of capping in UPI payment. Let us tell you every single thing related to it today. So the issue is that currently, 80% of the market for payments through UPI is in the hands of PhonePe and Google Pay. In October this year, only 4 apps Phone Pay, Google Pay, Paytm, and Cred Pay had a 96.4% share in the overall UPI market. 

In this too, PhonePe has a 49% stake, Google Pay has 34%, Paytm has 11% and Credit Pay has a 1.8% stake. The rest hold 3.5%. Now there is no upper limit fixed for you in this market. The upper limit or capping is to be decided according to the total number of transactions. That is, how many transactions an app can handle every month. Its upper limit should be fixed by the number of members. 

Capping means fixing the upper limit of the volume. Will not be able to hold much stake. Now coming to the fact that what is the purpose of the government behind this step? So the thing is that UPI is managed by NPCI, and it does not want that this entire work should be controlled by one or two companies only. For this, NPCI wants to remove any kind of risk in UPI payment. For this reason, in 2020, NPCI suggested bringing a 30% volume cap.

 

Which is to be implemented on an app application provider, then the date of implementation was kept on 1 January 2021, and it will be assessed every quarter. However, this has not yet been implemented. It is also believed that the date of implementation of this decision will be extended beyond December 31. 

Since payment through UPI has achieved great success, in such a situation, from the government to the reserve bank, this unique payment system is very serious. From the street vendors to the common people, payments as small as Rs 5 to 10 are being made and the concern of the government is related to this. The figures also justify the concern of the government. 

This year also there has been an increase of 7% in UPI transactions in October. A total of 730 crore transactions took place in October, in terms of volume, this figure is ₹ 12.1100000 crores. Earlier in September 2022, a total of 678 crores had come to UP, whose value was ₹ 11.1600000 crores. This is the reason why NPCI, RBI, and Government do not want any kind of risk in the UPI ecosystem. 

Now coming to the next point, why is this move a cause of concern for companies like PhonePe, and Google Pay, and what does it mean for customers? If this volume is implemented, then the sword of capping will hang over the heads of the companies all the time. As soon as this capping is triggered, they will have to reduce the transaction volume. Now for this, they may have to stop the onboarding of new users. 

Also, they may have to deboard old users from their platform. Now if this has to be done then the entire business of the companies will go awry. Consumers will also face a big problem as they will have to shift to other platforms. Overall, NPCI's step to keep the UPI transaction system strong and risk-free is fine, but this decision can prove to be a big problem for the platforms that have captured this business and for the common people associated with them.

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