The amazing story of UPI keeps growing and growing. An update.
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Unified Payment Interface cross $100 billion monthly transaction value
- The story: When the UPI system had started, no one expected it to take off in such a big way. UPI stands for Unified Payment Interface (UPI). It allows transfer of money from one bank account to another instantly via one's mobile phone. Payments can be made via app on mobile device only. The money transfer via UPI works on 24x7 basis. UPI is an initiative taken by the National Payments Corporation of India (NPCI) together with the Reserve Bank of India and Indian Banks Association (IBA). NPCI is the firm that handles RuPay payments infrastructure, i.e. similar to Visa and MasterCard.
- October 2021 record: The total value of transactions made using the Unified Payments Interface (UPI) crossed $100 billion in a month for the first time in October. This was the data shared by the National Payments Corporation of India (NPCI).
- Clearly, the UPI has further cemented its position as India’s most popular digital payments system.
- A huge 4.2 billion (420 crore) UPI transactions amounting to Rs 7.71 lakh crore (about $103 billion) were done in the month, marking all-time highs on both counts for the five-year-old payments channel.
- In September, UPI had registered 3.6 billion transactions worth Rs 6.5 lakh crore crore. This means the number of transactions jumped 15% and the value of transactions rose 18.5% in October. The number and value of UPI transactions have more than doubled since this time in 2020.
- Why the huge rise: The spurt in October is largely on the back of increased demand for online shopping amid the festive season sales. The gradual reopening of the economy since the ebbing of the second wave also aided this growth.
- History of UPI: The UPI system has passed several significant milestones since its launch in 2016. It crossed a billion transactions for the first time in October 2019, and the next billion came in under a year. Since the start of 2021, monthly transaction value has grown by close to 79% from Rs 4.31 lakh crore in January. The number of transactions, meanwhile, have increased by more than 83% from 230 crore in January.
- Other modes of digital payments also recorded a sharp surge in October. The Immediate Payments Service (IMPS) also touched an all-time high both in terms of number and value of transactions. It clocked 430.67 million transactions worth Rs 3.70 trillion in the month.
- NPCI’s National Electronic Toll Collection (NETC) channel, which runs FASTag, recorded an all-time high of 214.23 million transactions worth Rs 3,356.74 crore in October, indicating the return of road traffic with most states easing Covid-19 travel protocols.
- More on UPI: The Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience. NPCI had conducted the pilot launch with 21 member banks, on 11th April 2016 (by Dr. Raghuram G Rajan, Governor, RBI at Mumbai). Banks then started to upload their UPI enabled Apps on Google Play store from 25th August, 2016 onwards.
- UPI features include - Immediate money transfer through mobile device round the clock 24*7 and 365 days.; Single mobile application for accessing different bank accounts; Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines, yet provides for a very strong feature of seamless single click payment; Virtual address of the customer for Pull & Push provides for incremental security with the customer not required to enter the details such as Card no, Account number; IFSC etc.; QR Code; Best answer to Cash on Delivery hassle, running to an ATM or rendering exact amount; Merchant Payment with Single Application or In-App Payments; Utility Bill Payments, Over the Counter Payments, QR Code (Scan and Pay) based payments; Donations, Collections, Disbursements Scalable; and Raising Complaint from Mobile App directly.
- Benefits for end Customers - Round the clock availability; Single Application for accessing different bank accounts; Use of Virtual ID is more secure, no credential sharing; Single click authentication; and Raise Complaint from Mobile App directly.
- Summary: Clearly, India's digital payment ecosystem has taken off.
- EXAM QUESTIONS: (1) Explain the reasons why UPI system became India's biggest retail electronic payment system in just 6 years. (2) Compare and contrast the pros and cons of the top four online payment systems of India, today.
#UPI #NPCI #digitalpayments
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