In an unexpected turn of events, India has once more delayed a controversial plan aimed at curbing the dominance of significant tech firms over the country’s digital payment system. This prolongs a regulatory ambiguity that has been a burden on the industry for an extended period.

The National Payments Corporation of India announced on Tuesday that it is postponing the implementation deadline of the 30% cap on transaction shares via any individual app on the Unified Payments Interface (UPI) – a widely used digital payments network in India. The new deadline is set for December 31, 2026.

This decision offers temporary respite to PhonePe, backed by Walmart, and Google Pay, which together account for over 85% of UPI transactions. The UPI network, which executes over 13 billion transactions per month, has become the pillar of India’s digital economy since its inception eight years ago.

The regulatory body, operating under the aegis of India’s central bank and supported by more than 50 retail banks, finds it challenging to impose market share restrictions without causing disruptions to the services that millions of Indians depend upon daily.

On the same day, India also removed limitations on WhatsApp’s mobile payment service, allowing the Meta-owned instant messaging app to launch WhatsApp Pay for its over 500 million users in the South Asian market.

Throughout this year, officials have been in extensive dialogues with industry leaders on enforcing the caps. However, they have not found a viable solution that would not jeopardize the consumer experience, according to insiders privy to the discussions.

Earlier this year, an Indian parliamentary panel suggested that the government should promote the growth of domestic fintech players as alternatives to PhonePe and Google Pay.

The market share caps were initially suggested in 2020, with an original deadline that was later extended to 2025. Tuesday’s decision signifies yet another postponement in India’s attempts to regulate the increasing influence of international tech giants in its rapidly growing digital economy.

For PhonePe, which dominates nearly half of India’s digital payments market, the deadline extension provides much-needed certainty as it contemplates plans for an initial public offering. The company’s top executive had previously mentioned the regulatory uncertainty surrounding market share caps as a significant hurdle to their IPO timeline.

The UPI network, which ensures compatibility between different payment apps and banks, has become the preferred method for Indians to transact online, used for everything from street vendor payments to taxi fares.