Global technology giant Google criticized India’s move to limit the transaction share of some companies in the country’s digital payment sector on Friday, saying it would hinder the country’s booming digital payment economy.
In India’s flagship payment processor, the National Payment Corporation of India (NPCI) said on Thursday that from January 1st, third-party payment applications will not be able to process more than 30% of state-backed transactions. Google criticized the joint payment interface for this. (UPI) framework to facilitate seamless peer-to-peer remittances.
This move may hinder the growth of payment services provided by Facebook
According to NPCI data, more than 2.07 billion UPI transactions were processed in October, of which Wal-Mart’s PhonePe accounted for only more than 40% of the transactions. Google Pay followed closely, while competitors such as Paytm and dozens of other competitors split the remaining 20%.
Companies such as PhonePe and Google that have exceeded the upper limit of the NPCI regulations will have two years to comply with the new regulations.
Sajith Sivanandan, Head of Google Pay, said: “This announcement is surprising and has an impact on hundreds of millions of users who use UPI for daily payments, and may affect the further adoption of UPI and the ultimate goal of financial inclusion. India in a statement Said in.
The new cap does not apply to Reliance’s Jio Payments Bank or Paytm, which has a niche banking license and does not fall into the category of “third-party applications”.
A senior executive of a digital payment company who asked not to be named said: “This to a certain extent gives play to the entire theory of foreign players versus Indians against India.” “Why can’t NPCI say that the upper limit applies to all players? Third-party application provider?”
A Paytm spokesperson said that NPCI has taken the right measures for the growth of the UPI system.
He said: “The transaction volume caps of various payment applications will ensure that NPCI reduces the risk of the UPI platform and diversifies it.”
Founder and CEO Sameer Nigam stated that PhonePe is committed to ensuring that NPCI’s new rules will not interrupt the services provided to its customers.
NPCI and Reliance did not respond to requests for comment.
Facebook is in trouble
When the new regulations came out, NPCI finally approved Facebook’s approval to launch WhatsApp payments in India, thereby eliminating the limited services provided to 20 million users.
Although the long-delayed approval was a postponement by Facebook, the limited launch prevented WhatsApp from pushing payments in its largest market with more than 400 million users.
Despite this, the Menlo Park, California-based company welcomed Friday’s approval. The statement stated that the merger of WhatsApp and UPI will promote rural participation in the digital economy.
Ram Rastogi, a digital payment strategist and former NPCI executive, said that NPCI’s move to limit the transaction ceiling of each third-party payment provider will promote healthy competition.
“If only two technology service providers (PhonePe and Google Pay) occupy approximately 80% of the market, then it will pose a systemic risk, and NPCI’s restrictive measures are aimed at correcting this situation,” Rastogi said.
These restrictions are also expected to help regulators limit any potential cyber security threats.
Abizer Diwanji, head of EY India’s financial services, said: “It is important to have more competition to reduce the vulnerability of space and bring better control.”
© Thomson Reuters 2020