Swaroop Rao
Swaroop Rao 17 May 2016

Unified Payment Interface Set To Revolutionize The Cashless Transactions In India

Since the launch of Unified Payment Interface ( UPI) by NPCI recently, there has been a lot of buzz on how UPI can become a game changer for cashless transactions. It is currently regarded as one of the big innovations in the payment models in banking.

In simple terms UPI is nothing but a virtual debit card on your mobile. The mobile device can be a channel to authenticate the transactions in a few steps and rather instantly. Over the last one year there was significant increase in the non-bank mobile transactions versus bank mobile transactions due to the payment wallet players like PayTM, PayU etc. The introduction of UPI will help bank restore that lost business in the coming year.

 UPI payments work on the basis of unique ID called “virtual” address( also called as Payment address). The end customers can obtain many virtual addresses like abc@icici, abc@irtc, and other such aliases. The beauty of these virtual addresses is that, there can be several innovative usages built around these addresses – example, limit to specific payees, expiry of address for usage, amount restrictions etc.  This will also help to build additional security and various authorization rules on top of the addresses. The Providers are expected to map the virtual addresses to the actual account at the appropriate stage.

 Architecturally, the UPI can be envisaged as a unified layer that allows other channels like USSD, smartphones, internet banking on to a common layer at NPCI.

It provides a standard set of APIs that integrate the PSPs( Payment system Players) to APBS (Aadhaar Payment Bridge System), IMPS( Immediate Payment System), AEPS (Aadhaar Enabled Payment System), RuPay, ECOM, and NPS.

UPI provides significant value in taking existing systems to the next level.  The Mobile devices will provide both the Authentication and Authorization for both Direct Pay ( User initiated payment – push) and Collect Pay ( Supplier Initiated Payment – pull).

Considering the increase in smartphone users in India expecting to hit around 500 Million in few years, UPI will create a significant impact on the cash-less traction in our society. Added, UPI being cheaper, secure, open standards based, it will open up lot of innovations in the marketplace.

While banks are expected to come up with their Apps for UPI, there can be lot of innovative Apps that can be built around this. It would be quite interesting to watch how pure-play wallet payment providers will embrace UPI and come up with their re-imagined Apps. Given that we are currently dealing with multiple such wallets and money parked/locked in each of them, and wider acceptability of these wallets are yet to be established, UPI introduction will bring in new approaches and business models for these wallets. Interesting to see Apple Pay and Android Pay value props with UPI.

We can expect single window Unified Mobile Payment App that hooks up to multiple bank accounts of the user, mapping to multiple virtual addresses, with biometric authentication over mobile. Users should be able to define their rules  while creating these virtual addresses and manage. The Apps could also have additional field to store the virtual address for easy payment initiation right from the contact list.

Communicators and Messenger Apps like WhatsApp and Face book could enhance their Apps with UPI so that users can transaction whilst they are socially active over messages. Voice activated payments using Voice and Speaker recognition over mobile could be another possibility. The COD in ecommerce will simply be done over UPI Apps by scanning a QR code that is carried by the delivery agent at your door step.

 As UPI roll out becomes operational, it will be good to see the economy transacting electronically than cash payments and use of currency to come down. We may begin to see vegetable vendors, new paper bills, being paid through UPI mode thus leaving behind Big Data transaction trails which will open up infinite possibilities of consumer analytics.

Original Article

Please login or register to add a comment.

Contribute Now!

Loving our articles? Do you have an insightful post that you want to shout about? Well, you've come to the right place! We are always looking for fresh Doughnuts to be a part of our community.

Popular Articles

See all
4 Important Digital Marketing Channels You Should Know About

4 Important Digital Marketing Channels You Should Know About

It goes without saying that a company can't do without digital marketing in today's world.

Digital Doughnut Contributor
Digital Doughnut Contributor 5 November 2014
Read more
Google Analytics in Only Three Numbers

Google Analytics in Only Three Numbers

Financial advisors and other professionals can decipher a lot of information from Google Analytics with three simple categories.

Marina Howell
Marina Howell 17 October 2016
Read more
How to Optimize Your Confirmation Email Design and Make It Bring You More Sales

How to Optimize Your Confirmation Email Design and Make It Bring You More Sales

Email marketing is not just about newsletters! Transactional and confirmation emails shouldn’t be neglected when it comes to design and content. An exceptional confirmation email can help you nail another purchase in minutes.

Roland Pokornyik
Roland Pokornyik 17 October 2016
Read more
Get a Complete View of Your Customer Journey in 5 Easy Steps

Get a Complete View of Your Customer Journey in 5 Easy Steps

Here's how you can get a complete view of your customer journey so that your email campaigns continue to win new customers.

Sophia Skinbjerg
Sophia Skinbjerg 18 October 2016
Read more
How to Solve the Two Biggest Challenges of Social Media Marketing

How to Solve the Two Biggest Challenges of Social Media Marketing

Most small businesses spend more than 6 hours per week on social media marketing and more than one-third post at least once per day. Along with finding the time, the other biggest challenge professionals face is finding the right content to post. If you’re experiencing these challenges, keep reading because we’re going to help you solve them.

Melissa Darcey
Melissa Darcey 20 October 2016
Read more