Siddhartha S. Karnani Shares Key Insights on UPI Market-Share Caps in Mint Article

In a recent article published by Mint titled “Regulatory Paradox: Why Capping UPI Transactions Might Hurt the Ecosystem,” Siddhartha S. Karnani offered a nuanced perspective on the regulatory challenges surrounding proposals to impose market-share caps on UPI transactions. He highlighted that while a hard cap may appear straightforward in theory, it is far more complex in practice due to the strong network effects that underpin digital payments ecosystems. Once users converge on platforms that offer reliability and scale, restricting further onboarding becomes impractical and potentially detrimental to consumer experience.

Karnani suggested that instead of blunt regulatory caps, policymakers could adopt more calibrated approaches, such as incentivising interoperability, enabling differentiated pricing or settlement efficiencies, and providing targeted regulatory support to smaller players to help them compete on service quality rather than sheer scale. He further noted that the limited rise of other large UPI players reflects high entry barriers, thin operating margins, and the nature of UPI as a public digital infrastructure where early movers benefit disproportionately from scale.

Addressing concerns around data security and ownership, Karnani observed that foreign ownership alone does not automatically pose a risk; however, market concentration does elevate systemic concerns. He emphasised the importance of robust safeguards, including strict data localisation norms, strong access controls, and effective supervisory oversight, to ensure that consumer data and India’s national payments infrastructure remain secure and resilient.

Visit link to read full article: https://www.livemint.com/news/india/regulatory-paradox-why-capping-upi-transactions-might-hurt-the-ecosystem-11766043648824.html