WhatsApp has obtained regulatory approval from the National Payments Corporation of India (NCPI) to double the number of customers it can provide its payment service to in India. It comes after the Facebook-owned company (aka Meta) requested that there be no limit to the number of people it can engage with.
Thus, the NCPI has decided to gradually expand its user base, which is now limited to 20 million. The National Payments Corporation of India (NPCI) is a specialized unit of the Reserve Bank of India (RBI) that manages retail payments and settlements in India. He designed a payment and settlement ecosystem that integrates the Unified Payment Interface (UPI), Bharat Interface for Money (BHIM), BHIM Aadhaar, National Electronic Toll Collection (NETC Fastag), RuPay Card and Bharat BillPay.
Third-party application providers (TPAPs) such as Google Pay, PhonePe and others are reportedly not allowed to process more than 30% of the total number of transactions made through UPIs, according to a notification released in November. This restriction appears to be aimed at minimizing the formation of monopolies and supporting competition.
PhonePe, backed by Flipkart, and Google-owned Google Pay, currently control 47% and 34% of the UPI payments market, respectively, but they have until December 2023 to reduce their market share below the 30 barrier. % of the NPCI. This threshold is also the reason why WhatsApp cannot use its more than 500 million users in the country to influence the adoption of Whatsapp Pay.
Some reports suggest that WhatsApp has almost reached its 20 million user base for payment services in India. This regulatory approval is expected to give WhatsApp much more leeway to work and grow, but it’s unclear when the new threshold will go into effect.
The volume of transactions on each TPAP will be regulated by capping user onboarding, in accordance with the Standard Operating Procedure (SOP) specified in the notification. If the market share of a single TPAP exceeds 35-37%, the NPCI will send an initial warning by email or letter to a third-party payment provider and its partner banks; these entities must acknowledge receipt of this alert.
When a TPAP reaches 27-30% market share, a second warning is issued and the companies involved must provide assurance that efforts have been made to comply with the market capitalization threshold. Once the 30% mark is reached, these applications will be forced to immediately stop user integration.
Considering the current situation, where the two big companies have two years to apply the market share cap, and where WhatsApp Pay, the new entrant, is limited to 40 million users, it looks like the industry will remain stable.