Bad news for PhonePe, GooglePay, WhatsApp Pay UPI apps

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Bad news for PhonePe, GooglePay, WhatsApp Pay UPI apps:

UPI to transform from April 2020: How will it impact PhonePe, G-Pay and WhatsApp Pay?

PhonePe’s and Google Pay’s success ride on the back of UPI will soon hit a roadblock as the National Payments Corporation of India (NPCI) is all set to introduce new guidelines for digital payment companies to minimise concentration and systemic risks in UPI, reported IANS.

The fight for commanding more market share is going to end from April 2020 as National Payments Corporation of India (NPCI) steering committee has decided to cap market share to a maximum of 33% on each individual UPI apps.

NPCI proposed revised guidelines for Multibank Model to minimize concentration risks in the UPI ecosystem. The proposal to put caps on the volume or value limit within the fresh UPI framework.

The move will affect the market share of top apps running on UPI railroad of which PhonePe has already entered into the third year of operations while Google Pay completed two years of services in India. Paytm, which was one the market leader in UPI race, had announced to keep itself away from focusing on P2P transaction.

These new frameworks will be notified soon and will be effective from April 2020. The committee concluded that UPI transaction apps (both P2P & P2M) processing more than 5% of the total volume of the ecosystem shall mandatorily move to multibank model only.

Such platforms on UPI may associate with up to 10 Banks in the Multibank model and shall have minimum three sponsor banks within six months of the issuance of circular.

The committee approved to increase the current limit of Rs 1 lakh per transaction to Rs 2 lakh for all categories where double KYC is in place. The move will boost transactions for categories such as AMC, B2B collections, mutual funds, insurance, FIR, pre-approved disbursements and credit card payments et al.

The steering committee members also agreed to introduce Aadhaar OTP based UPI PIN generation for onboarding of new user to expand UPI access. At present, PIN generation is dependant on debit cards which is an entry barrier for customers not having a debit card issued by their respective banks.

The committee discussed the communication received from the Department of Revenue(DoR) on the inclusion of GST amount in UPI QR. The department had asked NPCI to include the option for merchants and customers to register their GSTIN and PAN to avail tax benefits. The committee has decided to implement this in the UPI dynamic QR and create the supporting infrastructure for merchant & customer tax incentive.

It was decided that GSTN and PAN shall be collected only on consent basis and customers’ PAN details will be stored with NPCI in encrypted form only. While the official timeline wasn’t revealed, NPCI will submit an implementation plan to the government and identify two member banks for technical proof of concept.

Moving a step forward, NPCI will request RBI for weeding out two-factor authentication norms on recurring transactions. NPCI also updated on the status of UPI 2.0 readiness with discontinuation of UPI 1.0 with effect from 31st Dec 2019.

While these changes are good news for Paytm and to some extent users, the proposal by the NPCI committee would put a brake on the growing scale of PhonePe and GooglePay. If NPCI goes with a decision to cap volume and value processed by firms in the UPI ecosystem, it will impact fundraising, valuation and scale of PhonePe and GooglePay directly.

WhatsApp Pay, which is still unable to launch its payments feature, will also have to contend with a limited scale. Capping the market share of apps in UPI ecosystem is likely to widen the use cases of Wallets in a big way. Paytm had already hinted about its revised focus on wallets.

In an interview with ET, Vijay Shekhar Sharma, founder and CEO of Paytm had emphasised that the company has 250 million KYC verified wallets and he’s optimistic about its positive growth. “A few months ago, we were pushing only UPI, but now we realise it has plateaued. Usage of wallets is not dead,” he added.

With NPCI’s proposed volume restriction of 33% on individual UPI players, faith in wallets seems to have made a comeback. Testimonies of revived trust in the wallet can be gauged from Swiggy and RazorPay’s plan of having wallets.

15 Comments  |  
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Entertainer
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I say we remove the gaypay introduced “scratch ass” scheme altogether along with this company and any other company using such abominations
Mofo#BLNT#destroyer of assured things#Use GayPay

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Deal Subedar
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Phonepe uses all payment modes ie. CC/DC and UPI.

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igen wrote:

Phonepe uses all payment modes ie. CC/DC and UPI.

yes but PhonePe claims to be largest player for UPI payments, records 343 M transactions in August.

Bengaluru-based PhonePe claims that it drove 37% of the total UPI transactions which took place last month (August).

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Critic
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googlepay already works on multibank model

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Deal Cadet
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I would say UPI was a success because of Tez/google pay, phonepe etc. or else it would have a big disaster. lol

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Deal Cadet
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Can some one summarise the post?
I did not understand what exactly the post is trying to convey and how it is going to effect individuals?

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ramadesidime wrote:

Can some one summarise the post?
I did not understand what exactly the post is trying to convey and how it is going to effect individuals?

You cannot have more than 33% of total upi users. Like if there are total 100 upi user only 33 you can make your customers.(crude summary,not accurate)

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P_A_N_K_A_J wrote:

I say we remove the gaypay introduced “scratch ass” scheme altogether along with this company and any other company using such abominations
Mofo#BLNT#destroyer of assured things#Use

GayPay

Third party apps ko access hi nahi dena chahiye tha. Only Banks apps should be allowed for UPI.

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Deal Cadet
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_One_Miller_ wrote:

Third party apps ko access hi nahi dena chahiye tha. Only Banks apps should be allowed for UPI.

You know how pathetic banks are in technology and customer care

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Deal Cadet
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Why 33% rule only for UPI not wallets

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Deal Lieutenant
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makeourdeal wrote:

You know how pathetic banks are in technology and customer care

Yes. UPI gained popularity because of these third party apps.

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makeourdeal wrote:

Why 33% rule only for UPI not wallets

Banks saw their revenue go down due to use of wallets. So they got UPI implemented. Now they see that third party apps are taking the benefits of UPI and their revenue is still not increasing. So the Banks now want to limit the access of third party apps to UPI.

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panchabhut wrote:

Banks saw their revenue go down due to use of wallets. So they got UPI implemented. Now they see that third party apps are taking the benefits of UPI and their revenue is still not increasing. So the Banks now want to limit the access of third party apps to UPI.

UPI was launched before surge in wallets. Wallet got popular after demonetization, UPI was launched before that.

https://m.economictimes.com/industry/banking/fi...

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Deal Newbie
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dont think 33% rule will get approval.

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makeourdeal wrote:

UPI was launched before surge in wallets. Wallet got popular after demonetization, UPI was launched before that.

https://m.economictimes.com/industry/banking/fi...

wallets came long before UPI. Even though UPI was launched in April 2016, it took about 5-6 months after that for all banks to come on board with NPCI for UPI payments.
yes demo helped expand the scope of wallets.

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