The National Payments Corporation of India (NPCI) has given its approval to Facebook-owned messaging platform WhatsApp to go live on the Unified Payments Interface (UPI) in the multi-bank model.
While WhatsApp awaits final clearance from the Reserve Bank of India (RBI), which will allow the company to roll the service out to its 400-million-plus user base, with NPCI’s green light, it can be offered to 20 million users, compared with 1 million now.
However, alongside the clearance to Facebook-owned WhatsApp, NPCI also issued a directive Thursday asking third-party UPI providers to cap the number of transaction on any platform at 30 per cent of the total volume of transactions processed in UPI, effective January 1, 2021.
This is expected to be an impediment to WhatsApp’s full rollout, which the company has been awaiting for over two years while being caught up in various regulatory and legal tussles.
The final clearance for WhatsApp from RBI was subject to the platform meeting regulatory requirements such as data localisation, which the NPCI had submitted post an audit to be satisfactory. In June this year, WhatsApp’s parent company Facebook invested $5.7 billion in Reliance Industries’ Jio Platforms for a 9.99% stake.
WhatsApp had started the beta testing of its UPI-based payment service in February 2018 in India as an in-chat payment feature that allows users to make transactions via WhatsApp. India’s UPI ecosystem is flooded with players, including banks that act as the backend infrastructure for the system as well as provide user interfaces for transactions, in addition to third party providers like Alibaba-backed Paytm, Google Pay, Flipkart-owned PhonePe, MobiKwik, Amazon Pay, etc.
NPCI’s move to cap the transaction volume of a single platform at 30 per cent comes a week after the total number of transactions on the UPI platform had crossed 2 billion in a month in October. In its statement placing the cap on the total number of transactions that any third party apps, NPCI said that the move was aimed to help address the risks to the UPI platform and protect the ecosystem as it scaled up in days to come.
Any third party app, which uses the NPCI platform for sending and receiving payments, will not be able to execute more than 30 per cent of the total payments being done on UPI. The 30 per cent will be calculated on the total volume of transactions processed in the past three months on a rolling basis. The cap, however, will not be immediately applicable on the existing players, two of which — PhonePe and Google Pay — currently enjoy close to 40% market share according to transaction volumes. These companies have been given time till 2023 to comply with the norms.
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