Title: Ensuring Equitable Digital Payment Distribution: Harmonizing Transaction Routing for Regulatory Adherence

Abstract:

The dominance of India’s digital financial landscape by just two Unified Payments Interface (UPI) applications, PhonePe and Google Pay, has sparked significant debate regarding market duopoly. In response to these concentration concerns, the National Payments Corporation of India (NPCI) has introduced a regulatory cap limiting any single UPI app to a maximum of 30% of the total transaction volume. However, implementing this restriction presents a substantial computational hurdle: determining how to reallocate user transactions among various apps to adhere to these capacity limits without inducing widespread user disruption.

This study formalizes this redistribution challenge as the Minimum Edge Activation Flow (MEAF) problem within a bipartite network comprising users and applications. In this model, establishing a new connection between a user and an app signifies a new application installation. The primary goal is to achieve a feasible flow that respects the specified app capacities while simultaneously minimizing the number of additional activations required. We demonstrate that the MEAF problem is NP-Complete.

To overcome these computational difficulties, we introduce scalable heuristics known as the Decoupled Two-Stage Allocation Strategy (DTAS). This approach leverages the inherent structure of the flow and the potential for capacity reuse. Our experiments, conducted on large-scale semi-synthetic transaction network data, indicate that DTAS generates solutions nearly identical to those of the optimal Integer Linear Programming (ILP) model within seconds. This provides a rapid and practical mechanism for enforcing transaction caps in a manner that is both fair and efficient.

Source: arXiv Generated at: 2026-06-04 00:00:00 UTC