WhatsApp Pay gets NPCI nod go live on UPI in India

“UPI is a completely open and interoperable ecosystem by design. There is no barrier to entry to new entrants at all. New players are still entering every day.
WhatsApp UPI Payment
WhatsApp UPI Payment

BENGALURU : Retail payments organisation National Payments Corporation of India (NPCI), which operates Unified Payments Infrastructure (UPI) in the country has given the much-awaited approval to WhatsApp to go live on through the multi-bank model.

According to NPCI, WhatsApp can expand its UPI user base in a graded manner starting with a maximum registered user base of 20 million in UPI.

Facebook-owned WhatsApp has been running its UPI-based payment system, WhatsApp Pay in Beta since 2018, with 1 million users. One of the biggest hurdles for the platform, continued to be Reserve Bank of India’s (RBI) data localisation norms for payment providers in the country, which the company had to comply with.

WhatsApp is currently fighting a Public Interest Litigation (PIL) in the Supreme Court, filed by MP of Communist Party of India, Binoy Viswam, to stop its full-scale operations, asking RBI and NPCI to ensure that data collected from UPI platform is not exploited or used by participants or players.

Along with this, NPCI on Thursday also said that it will issue a cap of 30% on transaction volume clocked by a player starting 2021.

The cap of 30% will be calculated on the total volume of transactions processed in UPI during the preceding three months. The existing player or third party app providers (TPAPs) exceeding the specified cap, will have a period of two years from January 2021, to comply with the same in a phased manner.

Mint was the first to report about NPCI capping the share of UPI players, in its July 30 edition.

According to NPCI, the decision has been taken in line to address the risks and protect the UPI ecosystem from frauds as it scales further.

NPCI first proposed the plan to limit the number or value of transactions in August 2019. It then said that payment apps will hit the limit if they exceed 50%

of all UPI transactions in the first year of the implementation of the rules, 40% in the second year and 33% from third year onwards. NPCI will trigger warnings to payment apps and sponsor banks if they are near the threshold.

In case of a breach of the mandated threshold, NPCI will start penalizing payment firms and banks, and ask them to stop onboarding new customers with immediate effect, Mint had reported earlier.

However, individuals aware of the discussions, said that NPCI is expected to issue new guidelines on market capping in the coming weeks, outlining on the workings of this decision.

“At present, no guidance is issued to players on how market-capping will work. But one can expect players to receive it soon. Mostly it seems like NPCI will trigger warnings to players currently holding more than 40% market share, asking them to limit market-share,” said a payment executive, which didn’t want to be named.

The move is expected to hurt payment firms including search behemoth Google’s, GPay (41%) payments app, Flipkart-owned PhonePe (42%) which command a total of 83% market share as per October-figures, forcing them to limit their dominance in the UPI-payments segment.

“UPI is a completely open and interoperable ecosystem by design. There is no barrier to entry to new entrants at all. New players are still entering every day.

So why penalize consumers by forcing them to use anything but the best apps/service providers available at any time?” said Sameer Nigam, co-founder and CEO, PhonePe, on the upcoming market-capping guidelines, in an earlier interaction with Mint.

Indian payment companies have also been relaying to get back Merchant Discount Rate (MDR) for UPI, or the cost which is paid to banks and payment service providers (PSPs), during a transaction; leaving no revenue model for players to grow this infrastructure.

In December, last year, Finance Minister Nirmala Sitharaman had said there will be no MDR charges, which will be applicable, on RuPay and UPI platforms, causing NPCI to revise the interchange fee and PSP fee to zero for debit card payments through RuPay and for UPI payments in the country.

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