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NPCI’s New Third-Party Payments Growth Cap Will Impact Google, Walmart

As Google and Walmart battle for market share in India’s fast-growing payments sector, they face a new obstacle.

The search and tech behemoth and the world’s largest brick-and-mortar retailer suddenly face strict new limits on their growth imposed by the National Payments Corporation of India (NPCI).

NCPI, which operates the country’s popular UPI (Unified Payments Interface) system, said on Thursday (Nov. 5) that it will be capping the amount of UPI transactions any single payments app can handle in a month to 30 percent of the total.

The organization, controlled by India’s largest banks, noted in a statement that the cap will “address the risks and protect the UPI ecosystem as it further scales up.”

But the newly minted cap could pose a big problem for both Google and Walmart, now top players in India’s payments sector, currently handling nearly 80 percent of UPI transactions, according to TechCrunch.

Walmart has a slightly bigger share, with its PhonePe handling more than 40 percent of UPI network transactions, which have become the most popular form of digital payments in India. Google Pay did just a little bit under that, handling 38 percent of UPI transactions, according to TechCrunch.

Meanwhile, the two tech giants and dominant players in India’s payments sector will now face new competition from Facebook’s WhatsApp payment app.

Roughly at the same time that it announced the cap, NPCI also gave a green light to WhatsApp to expand its payments service using the UPI network in a “graded manner.”

WhatsApp, which launched a pilot payments app in 2018 featuring a million users across India, will now be able to add up to 20 million users.

Not surprisingly, executives at the American tech giants aren’t exactly thrilled with the cap.

Among the unanswered questions is whether a particular payments service, such as Walmart’s PhonePe, would be forced to shut down UPI transactions on its app once it hits its 30 percent cap for the month.

One executive described the move “as the most absurd thing they have heard,” TechCrunch reported.

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