Payments

The National Payments Corporation of India (NPCI) is considering reviving a proposal to limit transactions per entity in the Unified Payments Interface (UPI) ecosystem to prevent market dominance by a few players. Currently, three major players dominate the market, with two accounting for 77% of transactions. The NPCI aims to mitigate systemic risks and promote competition. There are alternative measures like leveling the playing field, regulating data control, and allowing more participants, rather than imposing transaction limits, to ensure a diverse and competitive UPI ecosystem.

2016 was a transformative year, marked by the e-commerce sector’s challenges following the Indian government’s Press Note 3. This led to innovative business models and growth in related industries like logistics and warehousing. The year also saw Aadhaar enrolment surpass 1 billion, laying the foundation for India’s digital transformation. The introduction of India Stack, particularly the Unified Payment Interface (UPI), revolutionized digital payments. However, the focus shifted towards including the larger, underserved population in the digital economy, highlighting the need for a balanced policy framework that respects privacy while leveraging data-driven decision-making.

Despite the potential benefits of digital payments, its widespread adoption in India is faced with numerous challenges. The real bottleneck is merchant acceptance, hindered by transaction costs and lack of infrastructure. The Unified Payment Interface (UPI) offers hope, integrating with Aadhaar for secure transactions and potentially lower costs, but success hinges on merchant adoption and regulatory support, shifting focus from consumer to merchant-centric solutions.