India has once again pushed back a contentious plan to limit big technology companies’ control of the nation’s digital payments system, extending a regulatory uncertainty that has weighed on the sector for years.
The National Payments Corporation of India said on Tuesday it would extend the deadline for implementing a 30% cap on any individual app’s share of transactions on the Unified Payments Interface, or UPI, the country’s ubiquitous digital payments network, to December 31, 2026.
The decision provides temporary relief to Walmart-backed PhonePe and Google Pay, which together handle more than 85% of transactions on UPI. The network, which processes over 13 billion transactions monthly, has become the backbone of India’s digital economy since its launch eight years ago.
The regulator, which operates under the supervision of India’s central bank and is backed by more than 50 retail banks, has struggled to find ways to implement the market share restrictions without disrupting service for hundreds of millions of Indians who rely on these payment apps daily.
On Tuesday, India also lifted restrictions on WhatsApp’s mobile payments service, letting the Meta-owned instant messaging app roll out WhatsApp Pay to all its 500 million-plus users in the South Asian market.
Throughout this year, officials held extensive discussions with industry leaders about ways to enforce the caps, but found no feasible solution that wouldn’t risk disrupting the consumer experience, according to people familiar with the discussions.
An Indian parliamentary panel earlier this year urged the government to support the growth of domestic fintech players that can provide alternatives to PhonePe and Google Pay.
The market share limits were first proposed in 2020, with an initial deadline that was later pushed to 2025. Tuesday’s decision marks another delay in India’s efforts to check the growing power of global technology giants in its booming digital economy.
For PhonePe, which controls nearly half of India’s digital payments market, the extension provides crucial clarity as it weighs plans for an initial public offering. The company’s top executive had previously cited the regulatory uncertainty around market share caps as a key obstacle to their IPO timeline.
The UPI network, which facilitates interoperability among different payment apps and banks, has become the most popular way Indians transact online, used for everything from street vendor payments to taxi fares.