In a major blow to Indian gaming startups during the ongoing Indian Premier League (IPL) season, the National Payments Corporation of India is mulling a permanent ban on all gaming transactions under Rs 50 on its popular UPI platform.
“These transactions especially spiked during IPL matches, which has led to apprehensions among NPCI and member banks that increased transaction loads could lead to more system outages,” according to a report.
India’s gaming ecosystem has seen a twenty-fold growth since 2016, bolstered by marquee investors like Tiger Global, Sequoia India, and Falcon Edge.
The ban is aimed at moderating volumes on UPI that has led to a spike in banking outages and technical declines due to a sudden surge in transaction volumes owing to accelerated digital adoption during pandemic.
The gaming industry is already exploring ways to petition the government against the ban. “We have made representations to NPCI through industry forums including IAMAI and FICCI. This is a major blow to our business,” an executive representing the gaming industry said.
However, NPCI sources argue that low-ticket transactions are misuse of UPI which unables transaction processes due to sudden spike in processing loads.
The industry, however, reportedly said that they would cut down the use of UPI from now on.
Gaming industry sources said such a rule is against market principles because it cannot ask its customers to not make payments below Rs 50.
The NPCI had been mulling such a ban for several weeks and wanted the ceiling for the transaction ban to be as high as Rs 250, industry sources said.
They also said the ban could be a huge blow to the industry because UPI is the preferred mode of payments for over half its customers.
“A bulk – over 50% — of our transactions are under Rs 50. This is a huge blow to the industry,” the person added.
Most states in India allow games like rummy, poker, and fantasy sports, as they consider them as skill games. However, Telangana, Orissa, Assam, Sikkim and Andhra Pradesh have banned these games under their anti-gambling laws.
The user base of the fantasy sports industry grew at a rate of 165.9 per cent during 2016-2020, from 2 million in June 2016 to 100 million in 2020.
The market for online fantasy sports was estimated at Rs 2,300 crore to Rs 2,700 crore, while the market for non-fantasy, real-money gaming such as rummy and poker was between Rs 2,500 crore and Rs 3,000 crore in the previous financial year.
The number of OFS players is close to 100 million and real-money gamers number about 30-40 million.