India has once again pushed back on a controversial plan to limit tech giants' control of the country's digital payments system, extending years of regulatory uncertainty that has weighed on the sector.
Unified Payments Interface or UPI; India said on Tuesday it would extend the deadline to implement a 30% limit on share transfers of any company in the country's ubiquitous digital payments network.
The decision gives temporary relief to Walmart-backed PhonePe and Google Pay, which together process more than 85% of transactions on UPI. The network, which processes more than 13 billion transactions every month, has become the backbone of India's digital economy since its inception 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 market share limits without disrupting service to the hundreds of millions of Indians who rely on these payment apps every day.
Throughout the year, officials have had extensive discussions with industry leaders about ways to implement packaging, but haven't found a viable solution that would disrupt the consumer experience. According to people familiar with the discussions.
Market share limits were first proposed in 2020 and later pushed back to 2025. Monday's decision is another delay in India's efforts to check the growing power of the world's tech giants in its growing digital economy.
For PhoneP, which controls almost half of India's digital payments market; The expansion provides important clarity as it weighs plans for an initial public offering. The company's top executive previously cited regulatory uncertainty over market share caps as a major obstacle to their IPO timeline.
The UPI network, which enables interoperability between different payment apps and banks, has become the most popular way for Indians to pay online, used for everything from street vendor payments to taxi fares.
The development highlights the challenges facing regulators, particularly in the digital age with market competition and emerging countries where the use of technology is pushing regulatory boundaries.