Unified Payment Interface - A Single Digital Wallet for Your Spends

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• Unified Payment Interface - A Single Digital
  Wallet for Your Spends

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• India is inching towards a cashless economy
  through innovative payment solutions introduced
  by the RBI and the National Payment Corporation
  of India (NPCI). Their latest offering is the
  Unified Payment Interface (UPI), using which your
  smartphones get transformed into virtual debit
  cards for money transfer.
• The UPI Demystified
• The UPI interface allows customers to make fund
  transfers between two people, person-to-business
  and business-to-person.
• In the current mobile payment system, only the
  send mode is available. The advantage of the
  UPI is that it enables the person receiving the
  funds to initiate a transaction. So, in addition
  to the ability to send funds to a recipient, the
  UPI empowers the recipient to initiate a cash
  collection from a source.

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• Previously users need to to provide their account
  number, branch IFSC code, Aadhaar number, mobile
  number. Although the platform also use the
  Aadhaar number, mobile number and account number
  of an individual, these details are not divulged
  during the payment process.
• The user could initiate transfers using virtual
  addresses (resembling email ids) that are aliases
  to bank accounts. Alternatively, fund transfer is
  also possible using Aadhaar number as an
  identifier. This is a very useful functionality
  for the rural demographic.
• An exciting feature of the interface is the pay
  by date, which allows payment requests to be put
  on hold and paid at a later date. It allows
  recurring payments, like salaries, school fees,
  subscriptions, etc. with a one-time secure
  authentication.

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• It also allows PSPs to pay from an account using
  multiple virtual addresses, segregated by
  passwords, PINs or biometrics.
• Interoperability is the real game changer here.
  With the ambitious plans chalked out for the UPI
  system, the need to have different wallets for
  different e-commerce sites could be completely
  eliminated.
• The Upi App platform mandates a limit of Rs. 1
  lakh per transaction.
• UPI runs on IMPS hence the service is available
  real-time and 24x7.
• NCPI has stated that each transaction through UPI
  will be charged Rs. 0.50, and it will appear as
  an IMPS transaction on the bank statement.

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• UPI is an extremely secure payment method, and
  transactions happen in an encrypted format.
• Currently, the Upi App is not available on App
  Stores, but it will be launched shortly.
• Impact on Mobile Wallets
• Popular mobile wallets like MobiKwik has millions
  of users who are loyal to these platforms owing
  to the convenience, security and speed of
  transactions. With the UPI in place, these
  companies expect to unlock new channels for
  growth and enlarge their reach.
• The RBI has only authorised banks to be Payment
  Service Providers for UPI, keeping mobile wallets
  away from the platform. These non-bank members
  are currently awaiting directions from the RBI
  and NCPI to get access to the system. Unless
  wallet companies signify their relevance through
  innovative methods, they will find it difficult
  to survive the competition.

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• Impact on Payment Gateways
• Payment gateways aggregate various payment
  methods like credit cards, netbanking and mobile
  wallets. These also offer detailed information on
  received payments, provide transaction
  management insights and enable customisation at
  every level. This is beyond the current
  capabilities of the UPI. Moreover, the protection
  that payment gateways offer against disputes is
  unavailable in the UPI today, but will be
  incorporated as the platform matures.
• In conclusion, the success of the UPI largely
  depends on smartphone penetration in the country.
  But it currently looks like a step in the right
  direction towards faster, smoother and easier
  payments.
• Source http//bit.ly/2lXm1BW

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