Authored by Balaji Jagannathan, Co-founder and Director, Paycorp.io
Developed by the National Payments Corporation of India (NPCI), the Unified Payment Interface, or UPI as it is commonly called, changed the way India made payments. Although UPI was already in the ecosystem since 2016, it was UPI 2.0 that made digital payments a popular mode of payment.
Shortly after the launch of UPI 2.0 in September 2018, demonetization was announced and the subsequent lack of currency circulation impacted its faster acceptance as a mode of payment.
UPI 2.0 effectively ushered in an era of the digital economy where people shifted to cashless payment almost overnight.
As electronic payments became the preferred and more popular form of payment, UPI transactions started soaring. UPI has benefited Indian consumers greatly.
Instant payments are available round-the-clock and only require a virtual payment address, thus there is no longer a need for customers to enter sensitive information like bank account numbers or other details each time a transaction is started.
It utilizes a Virtual Payment Address, a special ID provided by the bank. The procedure of two-factor authentication also ensures that there is no scope for a safety breach of your hard-earned money.
Thus UPI 2.0 rose as a safer and more secure mode of payment compared to debit and credit cards.
Another distinctive element of UPI is interoperability between banks. A user does not need to keep money in a different wallet for each app, as was the case with older e-wallets. You can use any UPI client app and link several bank accounts to it.
Instant payments are feasible and are available 24 hours a day using the faster-than-NEFT Immediate Payment Service (IMPS). UPI also offers bill sharing, which is perfect for times when you go out with friends and want that the bill should not land on one person’s head. Additionally, a user can now pay bills and send payments to merchants thanks to the introduction of UPI 2.0. For recurrent payments, an auto-pay option is also available.
India’s startup ecosystem has grown phenomenally in the past decade. It would be fair to say digital payment methods like UPI have been crucial in the smooth functioning and success of numerous new enterprises.
For several Fintechs and start-ups in India, it has aided in business creation. Through the UPI network, financial institutions, e-wallets, and payment service providers can connect to the framework and develop applications using a smartphone device. It serves as a payment portal for domains as well.
It has provided many opportunities for companies to build innovative concepts that can enhance the customer experience.
The potential for innovation in this field is enormous. Customer-merchant interactions have greatly improved. Customers no longer have to worry about shops holding their payment information.
It undoubtedly benefits small enterprises, where consumer confidence is low and payment costs are now high. Moreover, in case of any suspected activity direct complaint filing using a mobile app is possible, ensuring that your money is safe.
After luring domestic businesses, UPI is attracting cross-border transactions as well. The low cost of fund transfer and remittance payments is the biggest cause of this move. Today, via the peer-to-peer payment system one can instantly transfer money to partner countries.
The country is abuzz with G20 summit excitement as India will be the host in 2023. Recently, the announcement has been made to make a UPI payment facility available to inbound travelers from selected G20 countries, which would allow them to make payments via UPI platforms without an Indian mobile number.
As exciting as it sounds, this latest move will make inroads for better tourist experiences from foreign countries as UPI is now acceptable at local vendors as well as high-end restaurants. In the future, it will also lead to newer avenues opening for businesses that wish to go global, as UPI has played a key role in the growth of domestic businesses.
UPI 2.0- Effectively ushered us into an era of the digital economy
How to send funds directly to a bank account using Google Pay
How to send GPAY UPI QR code to someone?
2 Ways to find UPI ID from QR code for Payment
How to Recharge your Mobile number using Phone Pay
Vyapar Billing Software enables interface with UPI payments for digital payments