Basically, the NPCI, who regulates digital payment systems in India, recently released a statement announcing how Google Pay & Phone Pe and other 3rd Party Apps or TPA will have a cap on transactions. This means that third-party apps in India can process a maximum of 30% of their transactions via the UPI. This announcement hits especially Google Pay and Phone Pe, the current market leaders, really hard. In fact, many aggregators are confused. They wonder why this move at a time when UPI and digital payments are still in their infancy in the Indian market. Read the article to understand in detail.
Or find out why we think this is relevant to you, the MBA student?
Well to begin with, no matter what domain you specialise in or are interested in, this is a byte of news that you could be asked during multiple GD-PIs.
Besides, India's digital payments market is at an interesting point right now. With a system like the UPI, which has essentially helped build checks and balances for digital payments, apps facilitating these services are on the rise. And digital payments are still in their infancy in terms of adoption in India. There's a huge market that still remains to be tapped. Amidst all this comes NPCI's announcement that 3rd party apps will have a cap on transactions they can process.
This means Indian companies like Jio payments, even WhatsApp Payments (more on that later), will have an easier time compared to 3rd party apps. On the surface, this looks like a conundrum. The NPCI is not a government-regulated body. It is in fact a body that combines entities from different banks to regulate retail transactions and digital payment apps, etc. So it seems strange that they have announced a cap on 3rd party app transactions when digital payments are still in the early stages of adoption in many parts of India. It makes no sense. One would think, they would actually not put any such caps so that more and more people would pay digitally irrespective of the apps they use. And then there's WhatsApp. WhatsApp has received the licence to start their payments in India now. So it seems 3rd party apps get to battle with competition and also have to face this cap! Whew!
But then, maybe this is a way to ward off a monopoly! Maybe the NPCI doesn't want too much power to be concentrated in the hands of too few, especially 3rd party apps. And we are speaking of not just users, but user data here. On the other hand, regulating bodies need to maintain their vigilance, but not become dictatorial. In any case, 3rd party apps have until 2023 to implement this cap. How do you think these apps will put up with these restrictions?
Share your ideas and opinions in the comments section below!
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In Other Highlights:
After years of facing legal hurdles, WhatsApp finally made an entry into the payment space last night. It has been allowed to initially offer the service to 20 million customers out of its approximately 400 million user base. Here are a few things to keep in mind while using WhatsApp for payments.
While driving down to Dadar, we came across a billboard advertising a new medical consultation app with the brand name ‘Dhani.’ The logo showed a bag of coins, presumably. But the billboard advertised doctor consultation on your phone. On more in-depth research, we discovered that Dhani does both doctor consultation, personal loans, and medical insurance. Maybe they wanted to hedge their bets on all fronts. Is this the best brand name they could think of? What would you do?