UPI is about to get better
Users will be able to set mandates for recurring payments and transact using Aadhaar-based biometric authentication
The National Payments Corporation of India (NPCI) will soon launch a new version of Unified Payments Interface
(UPI). Christened UPI
2.0, the next generation platform will simplify transactions even further for users.
While UPI 1.0 was about the person-to-person transaction, UPI 2.0 plans to ease payments to merchants. “We have already started witnessing a shift in behaviour over the past few months with the share of consumer-to-business payments increasing month-on-month. The launch of UPI 2.0 will only help broaden the use cases, thereby enhancing its appeal to a wider set of customers and businesses,” says Shyamal Saxena, country head–retail banking (India), Standard Chartered Bank.
International technology giants are also keen to be a part of the UPI ecosystem. Google has already launched Tez app for UPI. WhatsApp is in the process of doing so. Bankers feel that UPI is set to grow faster than ever before as non-financial companies get into the space and a new feature - setting mandates - brings more merchants into the ecosystem. “For merchants, setting up UPI-based payment is faster and more economical than having a point of sale (PoS) terminal to swipe cards,” says Suresh Rajagopalan, president-software products at FSS, a payments solution company. Rajagopalan gives the example of one his customers, an oil marketing company (OMC), which is gearing up to launch UPI at all its petrol pumps across the country. The OMC's customers just need a virtual payment address (VPA) or scan the Bharat QR code using their UPI app. Implementing PoS on such a large scale wouldn’t have been easy.
UPI 2.0 will allow individuals to set up mandates for recurring payments, such as for utility bills, insurance premiums, systematic investment plans of mutual funds, rent, etc. NPCI is looking at mandate creation as a one-time activity, allowing users’ account to be debited according to the agreed terms and conditions, without the user having to authenticate the transaction every time. According to bankers, UPI 2.0 will be able to initiate mandates by either the payer or the payee. “Currently, recurring payment mandates are set up by filling up a form or issuing post- dated cheques. It takes several days to activate it. UPI 2.0 will do away with the lengthy process and allow mandates to be set instantly,” says Harshil Mathur, CEO and co-founder, Razorpay.
Along with the launch of UPI 2.0, NPCI also plans to open up UPI as a mode of transaction for international inward remittances. Settlements that were happening with the beneficiary bank account through IMPS or NEFT will also happen through UPI. “When someone is sending money from overseas, he can transfer the money based on an individual's VPA. The person sending the money doesn’t need to mention account details and IFSC codes,” says Ritesh Pai, chief digital officer at Yes Bank. Yes Bank has tied up with 30 money exchanges to offer this facility.
The new version will also allow transaction authorisation using Aadhaar-based biometric. Biometric authentication takes away the need for the user to remember his password every time he transacts. It also addresses security concerns that arise if users lose their mobile phones and others are able to access their UPI password.