Unified Payment System/ UPI: India
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Unified Payment System/ UPI
The Times of India, August 26, 2016
Mayur Shetty
The RBI has cleared a Unified Payment System a platform which links bank account numbers to virtual payment addresses (aliases). The UPI-enabled app in effect turns your smartphone into a bank and has come as a boost to a cashless economy .
Just as an ATM of one bank can be used to access accounts in all banks in the network, any UPI-enabled app can be used to log into one's accounts in other banks. Second, the interface overcomes one of the biggest pain points in sending money online -that of knowing 15-digit account numbers and an 11digit IFSC code (used to identify bank branches). Instead of account details, the receiver has to merely share an alias like xyz@axisbank. The UPI makes use of the existing Immediate Payment System (IMPS) which allows funds transfer using bank account number, an IFSC code and other credentials.
“Real-time sending and receiving money through a mobile application at such a scale on interoperable basis has not been attempted anywhere else in the world. The UPI app will be made available on Google Play Store by banks,“ NPCI managing director and CEO A P Hota said here on Thursday .
Twenty-one banks will go live over the next couple of days. But the country's largest bank, SBI, has expressed concerns and has kept it on hold until it gets more clarity from the National Payments Corporation of India (NPCI), the umbrella organisation for retail payment systems in India. Of the 21 banks, eight banks have gone live.
“Our app is still under development. We have raised some security concerns on the registration process and transactions being timed out. The NPCI has not yet come back.We will be ready by Septemberend. But the decision to join will depend on NPCI coming back to us with clarifications,“ said Manju Agarwal, deputy MD, SBI. HDFC Bank too is working on its application and expects to be ready in three weeks. ICICI Bank has announced that it will integrate its iMobile and Pockets app with UPI in the next few days. iMobile is for the bank's customers, while Pockets is an app with a prepaid instrument available to anyone who downloads it.
Kotak Mahindra Bank has decided to play it safe and provide a separate application for UPI. “We are in process of development and certification of UPI-enabled app. We will launch a new app which will be UPI-enabled in 4-6 weeks. “ said Deepak Sharma, chief digital officer, Kotak Mahindra Bank.
2019, Mar: Kotak first to charge for UPI use
Digbijay Mishra, April 1, 2019: The Times of India
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From: Digbijay Mishra, April 1, 2019: The Times of India
Unified Payments Interface (UPI), which has been leading the digital payments push since demonetisation, will no longer be free to use for peer-to-peer (P2P) transactions as Kotak Mahindra Bank has become the first lender to charge beyond a monthly limit of 30 transactions from May.
Several other banks have held discussions with National Payments Corporation of India (NPCI), the umbrella payments body that manages UPI, to bring fees and cap the number of free monthly P2P transactions from one bank account, said sources.
Kotak Mahindra, in an email notification to some of its account holders, said it will charge Rs 2.50 for every transaction worth Rs 1,000 or less while the same would be Rs 5 for transactions of more than Rs 1,000. This will be applicable across all platforms, including Paytm, PhonePe and Google Pay, three players who now control 90% of the transactions.
A Kotak Mahindra Bank spokesperson defended the move, saying that 95% of its customers do an average of 5-10 UPI transactions per month. A PhonePe spokesperson said the company will not charge users for P2P transactions while Paytm and Google Pay did not immediately offer a comment.
While bigger consumerfocused banks like SBI or HDFC Bank are yet to levy such fees, executives of new-age payments firms said charging P2P transactions goes against the idea of UPI and would have a negative impact on the digital payments ecosystem, driving consumers to opt for cash payments.
2022, 2023
Mayur Shetty, Sep 28, 2023: The Times of India
MUMBAI: Even as UPI payments rise every month, the apps that enable these transactions continue to consolidate market share. PhonePe's market share has touched nearly 50% of the total value of transactions. In about 15 months from now, NPCI's 30% cap on individual third-party apps' market share in UPI transaction volume comes into force.
The Walmart-owned fintech's share in the number of UPI transactions has risen to 47.2% in June 2023 from 45.8% a year ago, NPCI data showed.
In terms of value, PhonePe accounts for 49.8% of transactions versus 48.8% a year ago.With no money to be made on UPI transactions, banks have virtually left the space for third-party apps like PhonePe, Google Pay and Paytm - which together account for nearly 95.7% of the volume of customer-initiated transactions.
Among lenders, Yes Bank has the highest share of the total value of transactions at 0.7%. While the entry of WhatsApp was expected to increase competition in the UPI space, the messaging app has not been able to promote usage among its users through promotions such as cashbacks, scratch cards or other rewards.
According to Worldline's India digital payments report, in terms of transaction volume, in June 2023, PhonePe, Google Pay, and Paytm accounted for 95.7% of all transactions compared to 94.6% a year before. In terms of transaction value, the three accounted for 93.7% in June 2023 compared to 93.4% in June 2022. The dominance is likely a mixture of early-mover advantage and features offered in the apps.
YEAR-WISE DEVELOPMENTS
2018: UPI
From: Dilip Asbe, UPI 2.0 can turn into a mega citizen-scale pay system, January 11, 2019: The Times of India
The writer is the MD & CEO of NPCI
India capable of replicating China’s digital economy — better & faster
India enters 2019 on the cusp of a digital revolution, mainly due to major influencers. First, we have a regulator defining the landscape by innovation-led policies, fuelling new-age business models and maintaining security and risk management standards to highest levels. Second, we have a government that is focused on moving towards a digital or less-cash economy. Third, we have banks embracing technology to accelerate digital payments, proliferation of financial inclusion and superior customer services. And last, we have fin-tech innovators who are re-imagining solutions for our day-to-day problems and providing superior consumer experience for digital payments.
The Unified Payments Interface (UPI), the most advanced payment system in the world, was launched in 2016, designed on the principles of interoperability, consumer choice and forging partnerships between banks and fintechs, leveraging each other’s strengths. The RBI’s payment system division DPSS, under the governorship of Raghuram Rajan, played a key role in bringing banks together to promote this initiative. Support of the Indian Banks’ Association (IBA) and leading lenders has been a critical factor in its success. In the second half of 2018, the National Payments Corporation of India (NPCI) launched UPI 2.0 with the support of regulatory teams under former RBI governor Urjit Patel and deputy governor B P Kanungo to incorporate path-breaking features.
Several milestones were achieved in domestic payments last year. India’s RuPay Card crossed 500 million and Bharat BillPay on-boarded over 100 billers in its ecosystem. The Aadhaar payments services, too, surpassed 100 million unique customers every month. After demonetisation, the UPI-based ‘Bharat Interface for Money’ (BHIM) app, launched by Prime Minister Narendra Modi, has acted as a catalyst to nudge many third-party providers to launch the UPI app. We are
now seeing the results. Sticking to the design principle of “consumer choice”, there are now over 90 BHIM UPI apps provided by banks or third party providers to customers of 130 banks.
The Supreme Court’s decision to limit the use of Aadhaar database was a setback. The fintech community is relying on the government to identify a solution to use Aadhaar systems based on voluntary sharing by the customer. The NPCI had to stop the e-NACH (National Automated Clearing House) using e-sign due to the SC judgment. However, we are working to create alternatives, but it may take time.
While it was a practice to look towards the latest trends in Silicon Valley in the US, with UPI, the West has turned to partner with India for innovation. Many global giants (Google, WhatsApp, Amazon, Samsung, Truecaller, Xiaomi, etc) and Indian unicorns (Paytm, PhonePe, Hike, etc) have joined the UPI bandwagon in collaboration with banks.
Unlike China that operates mobile payments mostly under two players in a closedloop manner, the RBI has been
clear from the start to set UPI as an interoperable system. When it comes to mobile payments and financial inclusion using Aadhaar, India has an edge due to innovation.
While there are multiple ways for making payments, the market is broadly divided into three parts — a) financial inclusion that covers the JAM trinity, i.e. Jan-Dhan, Aadhaar and mobile (additionally, it covers Direct Benefit Transfers, e-KYC, etc), b) mobile and internet payments powered by UPI, IMPS (Immediate Payment Service), net/mobile banking and interoperable QR codes, and c) card-based payments.
In the coming years, we will see a significant shift to a mobile-first strategy with consumers using functionalityrich and user-friendly apps for P2P (peer-to-peer) or P2M (peer-to-merchant) payments. The electronification of all kinds of C2G (citizen-to-government) payments is a big opportunity. I’m glad to see the efforts from all government divisions pushed by the ministry of electronics and information technology (MeitY) and the department of financial services (DFS).
If the growth momentum continues, we hope that the use of UPI will take the shape of citizen-scale payments system. Volumes may come down in the short term once firms go slow on promotional offers. However, the outlook is very strong for medium to long term. We have started an awareness campaign to protect customers from social frauds. But, more needs to be done. Now that diverse payment platforms are available to customers, our goal would be to drive adoption among the masses. We have the potential and capability to do what China has done to build its digital economy, better and faster. Startups/fintechs, in collaboration with banks, should build specific-use cases to drive adoption that will be the main attraction of 2019.
2019, Mar: Kotak first to charge for UPI use
Digbijay Mishra, April 1, 2019: The Times of India
From: Digbijay Mishra, April 1, 2019: The Times of India
Unified Payments Interface (UPI), which has been leading the digital payments push since demonetisation, will no longer be free to use for peer-to-peer (P2P) transactions as Kotak Mahindra Bank has become the first lender to charge beyond a monthly limit of 30 transactions from May.
Several other banks have held discussions with National Payments Corporation of India (NPCI), the umbrella payments body that manages UPI, to bring fees and cap the number of free monthly P2P transactions from one bank account, said sources.
Kotak Mahindra, in an email notification to some of its account holders, said it will charge Rs 2.50 for every transaction worth Rs 1,000 or less while the same would be Rs 5 for transactions of more than Rs 1,000. This will be applicable across all platforms, including Paytm, PhonePe and Google Pay, three players who now control 90% of the transactions.
A Kotak Mahindra Bank spokesperson defended the move, saying that 95% of its customers do an average of 5-10 UPI transactions per month. A PhonePe spokesperson said the company will not charge users for P2P transactions while Paytm and Google Pay did not immediately offer a comment.
While bigger consumerfocused banks like SBI or HDFC Bank are yet to levy such fees, executives of new-age payments firms said charging P2P transactions goes against the idea of UPI and would have a negative impact on the digital payments ecosystem, driving consumers to opt for cash payments.
