UPI’s 30% market-share cap faces test as PhonePe and Google Pay hold 79%
PhonePe and Google Pay accounted for about 79% of UPI transactions in May 2026, leaving NPCI’s 30% per-app cap difficult to enforce before the December 31 deadline. Merchant MDR on payments above ₹2,000, due from October 15, could create a new revenue stream for payment apps.
The development
PhonePe and Google Pay retained around 79 per cent of UPI transactions in May 2026 as the 30 per cent app market-share cap approaches its December 31, 2026 deadline. MDR on merchant payments above ₹2,000 will generate revenue from October 15.
The numbers
- 30 per cent
- 80 per cent
- 2020
- December 31, 2026
- twice
- 79 per cent
- May 2026
- ₹2,000
- October 15
Why it matters to operators and investors
The cap and new MDR economics could make bank, merchant-acquiring, and smaller UPI-app partnerships more strategically valuable as leaders seek compliant growth paths.
The counter-case
The 79% combined share is less alarming than it appears because NPCI’s cap applies per app, not to the top two platforms collectively. Enforcement could be managed through phased user-onboarding restrictions, transaction-routing changes, or exemptions without materially disrupting UPI volume. Moreover, a merchant MDR above ₹2,000 may not become a meaningful profit pool: merchants could resist, policymakers could dilute or defer the charge, and payment apps may need to pass most proceeds to banks, PSPs, and incentive programs. Higher MDR could also push merchants toward cash, card acceptance, or transaction splitting.