UPI Success Story

NewsBharati 15-Jun-2023 12:08:21 PM

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UPI (Unified Payment Interface) is real time payment system which has reached in every nook and corner of India. UPI is showing exponential growth both in terms of number tr;ins;ic:tions ;incl v;ih1P. As pPr cl;it;i so1irc:Pcl from NPCI {N;ition;il P;iymPnts Corpor;ition of India) thetotal number of UPI transactionslast yearjumped 91.11%YoY, andthevalue of UPI transactions saw a 74.83% YoY increase in 2022. Currently about 2800 transactions are takingplace every second. Unified Payments Interface {UPI) platform hit a new high of 890 crores in April2023. The valueof these transactions was also at a newrecordat Rs 14.07 lakh crore. Picture below clearly shows we are world leader in Real Time Payment system. Hon. Prime Minister has recently said "Ilike how you've brought out the rising popularity of UPI. I laud my fellow Indians for embracing digital payments! They've shown remarkable adaptabi lity to tech and innovation"

After havingthis preamble let us understand what is UPI

Unified Payments lnterface(UPI) is a payment system that allows users to link more than one bank account ina single smartphone app and make fund transfers without having to provide IFSCcode or account number. UPIwas initially launched in2016.

This is a real-timepayment system where fundsare credited instantly ona real-time basis

The userwill only have to use a virtualaddress,known as a Virtual Payment Address (VPA) to carry out any transaction. UPI has been developedby the National Payments Corporation of India (NPCI) and is regulated by the Reserve Bank of India (RBI). UPI is slowly becomingthe most preferred form of digital payment. The below-mentioned things are required to transferfunds via UPI:

A smartphone
An active bank account
The mobilenumber mustbeactive and linked to thebank account
Internet connection

UPI has now becomethe most preferred form of digital payment. The UPI interface is compatible with most banks and many digital wallets, and payment applications are embracing UPI. Some of the apps include BHIM, Google Pay, Paytm, PhonePe, MobiKwikAmazonPayand thelike.

Participants in UPI:

Remitterbank
Beneficiary bank
NPCI
Merchants
Bank account holder
Payer PSP (Payment Service Provider)
Payee PSP (Payment Service Provider) What isso special of UPl!il

These features make UPIa very unique platform:

There isjust onesinge mobileapp to access various bank accounts.
Itfacilitates the lmmediatetransferofmoneyvia mobile devices 24*7.
The virtualaddress ofthecustomer forany kindof'Pull& Push' offers security. The customer does not have to enter informationlike card number,IFSC code or account number.
With one click, there is a two-factor Authentication - Aligned with the Regulatory.

Guidelines, andalso provides a seamless single click payment.

No need to carry the cashinvalet,or even goingto an ATM.
Youcan easily share yourbillswith friends.
Over the Counter Payments,Barcode (Scan and Pay) based payments, and Utility Bill Payments can bemade.
Youcan make merchant payment witha single app orin-app payments.
Youcan raisecomplaintsdirectly from the mobileapp.
Youcan make donations,disbursements, andcollections easily.
There are nofees andcharges applicable to the UPI platform. The UPI programme was launched with the aim to promote digital transactions. The NCPI had earlier marked the transaction charges to be SO paise per transaction. However,the Government of India had later cancelled these charges to make sure that more and more people started using the platform.
UPI transactions are secured using UPI PINs which is a 4-6-digit numerical combination.
All PSU Banks, Leading Pvt. Sector Banks, Leading Coop Banks,Small Finance Banks havejoi ned UPI hence bank customer has choice to link the bank of his choice to UPI App and also select suitablebank for individualtransaction.

Considering the overwhelming response UPI 2.0 was launched on 16Th August 2018 with followingadditionalfeatures,

1. Linkingof overdraft account: Inaddition to current andsavings accounts,customers can link their overdraft account to UPI. Customers will be able to transact instantly and all benefits associated with overdraft account shall be made available to the users. UPI 2.0 will serveas anadditionaldigital channel to access theoverdraft account.

2. One-time mandate : UPI 2.0 mandates are created with one-time block functionality for

transactions. Customers can pre-authorise a transaction and pay at a later date. Mandates can be created and executed instantly. On the date of actual purchase,the amount will be deductedandreceived by themerchant/individualuser.

3. Invoice in the inbox : Accordingto NPCI,this feature is designed for customers to check the invoice sent by merchant prior to making payment. It will help customers to view and verify the credentials and check whether it has come from the right merchant or not. Customers can pay after verifyingthe amount andother important details mentioned inthe invoice.

4. Signed intent and QR : This featureis designed for customers to check the authenticity of merchants while scanningQR or quick responsecode. It notifies the userwith information to ascertain whether the merchant is a verified UPI merchant or not. This provides an additionalsecurity.Customers will be informed in case the receiver is not secured by way of notifications, said NPCI.

In the recently conducted Global Fintech Festival between 19 to 22 September 2022 followingadditional facilities arenowmadeavailableon UPI2.0

a) UPILite : Once the feature is set up, the UPI lite wallet allows a user to do instant transactions of up to Rs 200, instantly without adding UPI PIN or wait for banks to confirm transactions. Notably, users can add a maximum of Rs 2,000 can twice a day to UPI Lite, makingthe cumulative daily usage up to Rs 4,000.

b) UPl123 : UPI 123Pay is a facility developed for Non-Smart phoneI featurephone users to

use the UPI without internet connectivity.

c) RuPay credit Card on UPI : You can link your RuPay Credit Card to your UPI like your bank account ,this enables you to use your credit card for making payment using UPI app which not possible earlier. With this facility you can use your credit card limit and the payment will bemade as per your credit card bill cycle. currently this facility is only for RuPay Credit card only however itis likely that will beextended to Master and Visa shortly.

d) UPI Auto Pay : With this new facility introduced under UPI 2.0,customers can now enable recurring e-mandate usingany UPI application for recurring payments such as mobile bills, electricity bills, EMI payments, entertainment/OTT subscriptions, insurance,mutual funds amongothers.

e) Bharat Bill Cross Border Payment System: The cross-border inward payments to facilitate NRls to undertake utility,education and other bill payments on behalf of their families in India.

This UPI feature has been made available to travellers from G-20 nations landing at specific

international airports.

The Group of Twenty (G-20) comprises 19 countries (Argentina, Australia, Brazil,Canada, China, France,Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, and United States) and the European Union.

Indians in other countries will soon be able to access the Unified Payments Interface { UPI)

usingtheirinternational mobile numbers.

Non-Resident Indians { NRls) in 10 countries can access UPI services for transactions without havingto depend ontheir India phone number.

The countries are Singapore, US, Australia, Canada, Hong Kong,Oman, Qatar,Saudi Arabia, UAE and UK.

This clearly shows growing impact of UPI and more and more countries are eager to joi n UPI

and ready to sigh required MOUs.

Recently (On 18/5/2023) Japanese Digital Minister Mr. Kono Taro said that Japan and India are trying to promote digital co-operation and we are serious about joining India's UPI Payment system since it is very convenient system of payment which can increase interoperability between governments. It could be another standard of cross-border payment and hoped that the two nations with UPI economies can work together on digital payments.

Sudhakar Kulkarni

Certifiedfinancial PlannerCM