30th
December 2016, the day on which Indian Prime Minister Mr. Narendra
Modi launched ‘BHIM’- Bharat Interface for Money. This was a
prominent step the nation took in its agenda of becoming a completely
cashless economy. BHIM is an app developed by National Payments
Corporation of India (NPCI) which is built on the framework of UPI,
Unified Payment Interface and it is the game-changer in the financial
services sector. The brainchild of NPCI & RBI which is a part of
cashless transaction & Digital India Initiative by PM Narendra
Modi.UPI has taken the finance industry & nation’s economy by a
swift move due to its amazing host of features. Let’s understand
more about UPI.
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UPI- A radical Change:
As
mentioned above, UPI stands for Unified Payment Interface which
allows users to transfer or receive money between any two bank
accounts through a smart-phone. It facilitates direct payment from a
bank account to merchants or perform basic banking activities. UPI is
the revolutionary model in the payments ecosystem which will very
well eliminate the horde of e-wallets we are witnessing & are
struggling to thrive in the market. To sum it up in easily
understandable terms, UPI is the next big thing in the money market.
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Why UPI?
In
the time which has a slew of e-wallets, payment
gateways
and online
payment options
available, why would we even need one more? Well, the answer to that
is very simple- UPI is not like any of them. This initiative by
National Payments Corporation of India which is powered by RBI &
Indian Banks Association eliminates the need of e-wallets, the hassle
of entering credit/ debit card details and the pesky passwords.
Contrary to the current procedures we follow such as NEFT, IMPS or
digital wallets which are still prone to hacking or malfunctioning,
UPI transactions are highly secure. Reserve Bank of India has only
allowed banks to be the Payment Service Providers of the UPI service,
mobile wallets are currently out of the scope now. On the other hand,
30 banks have been included as UPI service providers which also
offers interoperability for users who want to use a particular
wallet.
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Stepping into the Cashless Space:
Through
the astonishingly robust UPI platform, users will be able to do all
the transactions through a single identifier. Indian economy is on a
mission to become a completely cashless economy and by the looks of
the current scenario, we are still behind the schedule. As compared
to other nations in the world, India witnesses 95% of the
transactions in volume and 65% in terms of value through cash and UPI
is all set to change these statistics.
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I got mobile Wallet, why use UPI?
A
burning question that has been floating around in people’s mind is
that what would they do with their mobile wallets? The answer is
simple- they are about to be rendered useless. The banking regulators
are being hogged by all the mobile wallet providers to let them be
the included as service providers, but the board hasn’t relented so
far. Mobile wallets like PayTM can still survive up to some extent
due to their cash back offers and people would still use them for
quick transactions. However, since UPI offers transaction limit of
Rs. 1 lakh and that also with ease, security and more bandwidth. So
it boils down to the conclusion that unless the wallet companies
innovate something new, its going to be a downhill road for them in
the finance market. In addition to all that, UPI is free from the
pesky money-eaters like Visa & Master Card.
Unified
Payment Interface (UPI) is the fulcrum in the process of digitized &
cashless India initiative. Considering the massive response it has
gotten since its inception, UPI will act as a stepping stone for the
economy to become stronger, purer and independent.
