The National Payments Corporation of India (NPCI) has given the nod of approval to the messaging giant Whatsapp to ‘Go Live’ with its UPI services in India. The regulator said that Whatsapp can build its UPI user base in a ‘graded manner’, starting with a maximum registered user base of 20 million in the multi-bank model.

Whatsapp had developed its payment services back in 2018, and then tested it all this while on a beta program with select users. The messaging app already has more than 400 million users in India and can give a tough competition to market behemoths like Google Pay and PhonePe.

The payments system has been in testing for years now, always failing to get that final vote of confidence from NPCI to go through with a full scale expansion. However, earlier this year, a report claimed that WhatsApp pay is nearing a scale up of its function in India, and will soon get NPCI’s approval. Now, it looks like it’s finally here.

This comes just as NPCI has up with a new cap of 30% on the total volume of UPI transactions carried out on a third-party app. No third party payments app that supports UPI, like PhonePe and Google Pay, would be allowed to process more than 30% of the overall UPI transactions on their platforms.

“It will help to address the risks and protect the UPI ecosystem as it further scales up,” said the NPCI, giving the reason for the move. The 30% cap will be calculated on the basis of the total volume of transactions processed in UPI during the preceding three months. The cap on the UPI transactions will be in effect from January 1, 2021.

This cap can help WhatsApp grow, as it will force competitors to limit their expansion, thus giving the new player a better chance.

After demonetization, and especially during the pandemic, digital transactions through UPI has really picked up pace in India. The payment service has been collectively developed by all major banks in India and is also backed by the Indian government. UPI also became some of the payment apps’ primary service, such as Google Pay and PhonePe.

Last month, PhonePe crossed Google Pay to become the leading UPI app in India. It recorded 835 million UPI transactions in October, the highest in the country with a 40% market share, according to the company. On the other hand, even Google Pay processed more than 35% of the overall UPI transactions in India.

With the new cap on UPI transactions in place, PhonePe and Google Pay would be in trouble as they both share a market share of more than 30% each. NPCI says that the existing third-party apps, which are exceeding the cap, will have a period of two years to comply with the new rules in a phased manner, starting January 2021.