The governing body overseeing India’s popular UPI payments rail is considering easing its proposed market share cap for operators like Google Pay, PhonePe and Paytm as it struggles to enforce limitations, two people familiar with the matter told TechCrunch.

National Payments Corporation of India (NPCI), which reports to India’s central bank, is considering increasing the market share that UPI operators are allowed to hold to more than 40%, the two people said, requesting anonymity due to the sensitive nature of the information. The regulator had previously proposed a 30% market share limit to encourage competition in the space.

UPI has become the most widely used way people send and receive money in India, and the mechanism processes over 12 billion transactions a month. Walmart-backed PhonePe commands roughly 48% market share by volume and 50% by value, while Google Pay holds a 37.3% share by volume.

Paytm, once a heavyweight in the space, has seen its market share drop to 7.2% from 11% at the end of last year amid regulatory challenges.

The NPCI increasing market share limits is likely to be a controversial move, as several UPI providers have been hoping regulators would step in to curb the dominance of PhonePe and Google Pay, according to several industry executives.

The NPCI, which has so far declined to comment on the market share issue, did not respond to a request for comment on Thursday.

The regulator had initially planned to enforce the market share limits in January 2021, but pushed back the deadline to January 1, 2025. The regulator has struggled to find a feasible way to enforce its market share limits proposal. 

The stakes are high, particularly for PhonePe, which is the most valuable fintech startup in India, with a $12 billion valuation. 

PhonePe’s co-founder and chief executive, Sameer Nigam, last month said that the startup cannot go public “if there is uncertainty on the regulatory side.” 

“If you are buying a share at Rs 100 and you price it assuming we have 48-49% market share, then there is an uncertainty about whether it will come down to 30% and by when,” Nigam said at a fintech conference last month. “We are requesting them (the regulator) if they can find another way to at least solve whatever their concerns are or tell us what the list of concerns is,” he added.