The National Payments Corporation of India (NPCI) is mulling a permanent ban on transactions below INR 50 done through the United Payments Interface (UPI) on online gaming platforms.

The NPCI came to the decision due to the sharp increase in small-ticket transactions by online gaming merchants, including fantasy sports platforms, which lead to an increase in banking outages and technical declines.

"These transactions present a risk to the UPI system. Banks get clogged and are often unable to process other transactions due to sudden spurt in processing loads," an official told the Economic Times.

Fantasy gaming platforms have kept minimal contest entry fees, sometimes as low as INR one, during the ongoing Indian Premier League (IPL) 2021 season.

NPCI wants fantasy sports users and merchants to use standing instructions (SI) modes, such as net banking, for payments to ensure a smoother flow, a source said. 

Standing instruction is an order a customer (fantasy gamer) gives to their bank to automatically transfer a certain amount to another’s account (fantasy gaming platform) at regular intervals. This typically works for monthly payments on home loans and vehicle loans.

The NPCI believes this move will moderate the volumes on UPI, which have increased due to the preference for cashless payments, and prevent any disruptions in the service.

On the other hand, the gaming industry feels it may be problematic for the real-money gaming companies which rely on small transactions, usually under INR 100.

“They (NPCI) earlier wanted the ceiling for the transaction ban to be as high as INR 250,” the report cited another source.

“We have negotiated to bring down this ceiling. (But) such a rule is against market principles. How can we ask our customers to not make payments below Rs 50?” the person added.

The report also revealed that the gaming industry is exploring ways to appeal the ban, if it comes into effect, and has already approached the Internet and Mobile Association of India (IAMAI) and Federation of Indian Chambers of Commerce & Industry (FICCI) - the trade associations of India.