The popular digital payment system UPI (Unified Payments Interface) that lets people easily pay for things using their phones. Two apps, PhonePe (backed by Walmart) and Google Pay, are really popular for UPI transactions. These apps are so popular, in fact, that they handle over 80% of all UPI payments!
The Indian government was worried that having just two apps dominate the market could be a problem. So, they came up with a rule that would limit how much business any one company could do on UPI. They wanted to keep things fair and encourage competition.
This rule was supposed to kick in by the end of 2024, but according to news reports, that’s not happening anymore. The government has decided to delay the rule for up to two more years.
Why the Delay?
There are a couple of reasons why the government might be hitting pause on the rule. One reason is that they’re worried that forcing PhonePe and Google Pay to shrink their market share could slow down the growth of UPI payments overall. UPI has been a huge success story in India, making it easier and faster for people to pay for things without cash. The government might not want to do anything that could slow that progress down.
Another reason could be that figuring out how to enforce the rule is trickier than they thought. Limiting the business any one company can do sounds simple, but it gets complicated when you think about the details. The government might need more time to work out the best way to do it.
What This Means for PhonePe and Google Pay
For PhonePe and Google Pay, this delay is obviously good news. It means they can keep growing their businesses without worrying about a cap on how much money they can make.
What This Means for Everyone Else
For other companies that offer UPI payments, the delay might be a bit frustrating. They were hoping for a more level playing field, and now they’ll have to wait a while longer. But there’s still a chance for them to grow their businesses. UPI is a big market, and there’s room for more than just two players.
The Bottom Line
The Indian government is putting the brakes on a rule that would limit the size of some popular payment apps. This is likely to benefit the biggest players in the market, PhonePe and Google Pay, but it could also give other companies more time to catch up. The delay might also slow down the overall growth of UPI payments, but the government seems to be prioritizing that growth for now.
