War on black money: It’s mwallets vs UPI

GOING CASHLESS Launch of Unified Payments Interface sparks a debate on whether it will hit existing payment apps

MUMBAI: India’s payment ecosystem has got a new boost in the form of UPI (Unified Payments Interface) to make digital payments and peer-to-peer money transfers. The question that now arises is, will it swallow up existing payments apps? Or will it encourage more consumers to venture into the market?

With its focus on cleaning up the black economy, the government and the Reserve Bank of India launched the UPI through the National Payments Corporation of India (NPCI) on Thursday with 21 banks to make hasslefree money transfers.

The UPI mobile application allows a user to send money to any bank account through your mobile phone without entering debit/credit card details, netbanking/wallet password or even knowing the recipient’s bank account number.

“UPI will be an enabler to existing wallets and in fact can be used to fund the wallets,” said Dilip Asbe, chief operating officer, NPCI. “We have not got wallets under UPI as it is designed for banks for now. Also, wallets offer facilities beyond money transfer.”

So are mobile wallets under threat?

According to companies, the ecosystem is large enough for all players to co-exist. At present, nearly 90% of transactions are cash based in India.

“I don’t think it will have any negative impact on the mobile wallet ecosystem, not at least for next five years... Banks existed even before wallets and so did mobile applications. Still wallets are being used,” said Upasana Taku, co-founder of MobiKwik.

“Wallets are too big a market in India,” added Pramod Saxena, founder and CMD of Oxigen, “However, you may see a hit on those wallets, which are primarily funded through debit or credit card.”

“I think wallets can participate by being partners with banks. You use a Paytm not (just) because of the wallet, but because it helps you get a Uber or Ola ride. Partnership is their strength and they should use that,” said Vivek Belgavi, leader fintech, PwC India.