Gaming Apps May See Restrictions On UPI Transactions

A surge in low-ticket transactions across gaming apps during the IPL season is proving to be a headache for India's Unified Payment Interface, which processed over Rs 5 lakh crore in payments in March.

In April, with the IPL season kicking in, volumes are said to have increased sharply due to the traffic going through to gaming apps. Except this traffic comes in bursts during the time of games with a huge number of very low-ticket transactions, sometimes as low as Re 1 to Rs 10, hitting the UPI network, said a person familiar with the matter. These low-value transactions, which are possibly being used to push up volumes across gaming apps, are, in turn, burdening the UPI network and bank systems, the person said.

On Friday, the Economic Times reported that the National Payment Corporation of India may block gaming transactions of less than Rs 50 on the UPI network.

BloombergQuint could not independently confirm this. However, the person quoted above, said that some action will be considered in the coming days to keep a check on such transactions which are putting the system at risk.

An email sent to NPCI wasn't immediately answered.

Transactions via the Unified Payment Interface rose to Rs 5.04 lakh crore last month compared with Rs 4.25 lakh crore in February.

While UPI transactions have been rising steadily since the platform was introduced in 2016, the Covid-19 crisis gave an added push to digital transactions via UPI. For the full financial year 2020-21, the value of UPI transactions stood at Rs 41 lakh crore, 95% higher compared to the Rs 21 lakh crore a year ago, shows data from NPCI.

The volume of transactions surged 78% in 2020-21 with 22.3 billion transactions going through the network last year financial year.

A further pick-up in volumes due to gaming apps may have added to the pressure on the system but NPCI will likely consider any restrictions carefully before announcing them.

"While blocking transactions for a set of merchants within a category or a particular merchant is technically possible for NPCI, to my mind, it does not set the right precedence for a digital payments facilitator, and that too the only one in the country, to put caps on payments,” said Deepak Abbot, co-founder of Indiagold. “It seems as if the NPCI is penalising businesses for its own infrastructure deficiencies...” Abbot added.