Global tech giant Google criticized India’s move to cap the share of transactions of some companies within the country’s digital payments. The company says that the move would hinder the nation’s digital payments economy.
Google’s criticism came after flagship payments processor the National Payments Corp of India (NPCI) said third-party payments apps, from January 1 will not be allowed to process more than 30% of the total volume of transactions on state-backed United Payments Interface (UPI) framework, which facilitates seamless peer-to-peer money transfers.

The move will likely stymie the growth of payments services offered by Facebook, Alphabet’s Google and Walmart. More than 2.07 billion UPI transactions were processed in October, according to NPCI, with Walmart’s PhonePe accounting for just over 40% of those transactions. Google Pay was a close second, with rivals like Paytm and dozens of others splitting the remaining 20% share.

 “This announcement has come as a surprise and has implications for hundreds of millions of users who use UPI for their daily payments and could impact the further adoption of UPI and the end goal of financial inclusion,” Sajith Sivanandan, Business Head at Google Pay, India, said in a statement.

The new caps do not apply to Reliance’s Jio Payments Bank, or to Paytm, which have niche banking licences and do not fall into the “third-party apps” category.

A spokesman for Paytm said NPCI had taken the right measures for the growth of the UPI system.

“The transactions volume cap put on various payments apps will make sure that NPCI has de-risked and diversified the UPI platform,” he said.

PhonePe is committed to ensuring that NPCI’s new rule does not disrupt services for its customers, founder and CEO Sameer Nigam said.

The new rules came as NPCI finally granted Facebook approval to launch WhatsApp payments in India, clearing a limited rollout of the service to 20 million users.

Ram Rastogi, a digital payments strategist and former NPCI executive, said NPCI’s move to cap transactions for each third-party payments providers would foster healthy competition.

Source- Reuters