UPI 2.0

It is no surprise that UPI has been playing a critical role in encouraging digital payments in the country.

Post demonetisation, UPI-based online payments have soared in the country. According to a report of Inc 42, UPI has seen a massive growth in processing transactions, i.e from 0.93 million to 246 million within a time span of August 2016 to June 2018.

Also, the number of banks actively integrating with UPI has grown from 21 to 110 partner banks.

These are the reasons why UPI becoming the most preferred payment option:

• Money transfer is possible anytime (24×7×365)
• It acts as an email address for the customer’s money, which can be shared instead of bank details
• A highly secured payment option

NPCI launched UPI 2.0 in August 2018, which is an updated version of UPI.

Key features of UPI 2.0

Linking of overdraft account : 

In addition to current and savings 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 serve as an additional digital channel to access the overdraft account.

One-time mandate:

 UPI mandate could be used in a scenario where money is to be transferred later by providing commitment at present.UPI 2.0 mandates are created with one-time block functionality for transactions. Customers can pre-authorize a transaction and pay at a later date.It works seamlessly for merchants as well as for individuals. Mandates can be created and executed instantly. On the date of actual purchase, the amount will be automatically deducted and received by the merchant/individual user.

UPI 2.0

Invoice in the inbox: 

According to 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 verifying the amount and other important details mentioned in the invoice.

Signed intent and QR:

This feature is designed for customers to check the authenticity of merchants while scanning QR or quick response code. It notifies the user with information to know whether the merchant is a verified UPI merchant or not. This provides an additional security. Customers will be informed in case the receiver is not secured by way of notifications.

Business cases

With the launch of 2.0, UPI has the potential to digitize the entire ecosystem around the core payment functionality. Financial institutions (FIs) can look at utilizing the enhanced version of UPI and its features for multiple P2M (Person to Merchant) transactions across innovative use cases.High-value products/services will now also become attractive for UPI transactions as the amount has been revised and capped to 2,00,000 INR. Below are few business cases.

Future Scope of UPI 2.0

A report of Boston Consulting Group (BCG) says that between 2021–22 and 2024–25, the role of cash in the payments space will be shrink. The report said that UPI will dominate the payments space with 59% payments transactions. This would be followed by mobile and internet-based payments, which will constitute a fifth of the total number of cash and non-cash transactions.

The report further said that ATM transactions are expected to comprise 5% of total transactions between 2021–22 and 2024–25. It is being reported that the change in the payments landscape is a result of an intention to move towards a ‘cash-less economy’.

UPI 2.0 with its new features has a lot to offer consumers and merchants.From a consumer perspective, the functionality of the application will increase as it widely used nowadays.One could use it to book a taxi, pay for groceries, or purchase equity investments,etc.

In the near future, we at Easebuzz, will be looking forward to provide our merchants all the features that UPI 2.0 provides. We intent to provide our merchants UPI 2.0 as a payment option.

Unified Payment Interface- The Future of Indian Finance Ecosystem

30^th 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.

• 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.

• 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.

• 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.

• 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.