NPCI’s unified payment interface to start in April---
NPCI’s unified payment
interface to start in April
The
UPI project will allow a customer to instantaneously transfer funds across
different banks with the use of a single identifier
Mumbai: National Payments Corp. of India Ltd’s
unified payments interface (UPI) project, which will allow customers to
transfer money and make payments almost as easily as they send a text message,
will go live in April.
NPCI, which
operates the Rupay payments network that competes with Mastercard and Visa in
India, is testing the interface in association with Axis Bank Ltd, A.P. Hota,
managing director and chief executive officer of NPCI, said in an interview on
Tuesday.
Twenty-nine other
banks have also agreed to start UPI-based services to their customers starting
the first quarter of the next financial year, he added.
UPI will allow a
customer to instantaneously transfer funds across different banks with the use
of a single identifier. Multiple bank accounts can be linked to a single mobile
banking application and money can be both received and requested through the
same interface. The product will eliminate the need to exchange sensitive
information such as bank account numbers, one-time passwords or phone numbers
during a financial transaction.
“If you go to a
shop or use a taxi service, the shopkeeper or the taxi driver can collect money
through UPI. All you have to do is give your virtual address instead of bank
account number or mobile number,” said Hota.
The customer will
have to key in their password on their phone, thereby approving the said
transaction, which will happen instantaneously, Hota added.
Nandan Nilekani,
co-founder of Infosys Ltd and former chairman of Unique Identification
Authority of India, has been advising NPCI for its UPI service. Nilekani did
not immediately respond to an email seeking comments on Wednesday.
The introduction
of UPI can have a significant impact on the retail payments space, particularly
given the rapid growth in mobile payments in India over the past few years.
Banks reported 32.48 million mobile transactions in October, where funds worth Rs.30,568
crore were transferred, according to data available with the Reserve Bank of
India (RBI). This compares with 14.7 million transactions worth over Rs.8,400
crore a year ago.
Making
transactions through the mobile easier and more secure will reduce the high
reliance on cash in the economy. Sixty-five per cent of all consumer
transactions in terms of value are still carried out in cash, according to a 17
December report by JM Financial Institutional Securities.
“UPI will bring in
a big change in the payments space. The impact of it is that it will allow any
bank to on-load customers across board. For instance, you will be able to use
our bank product seamlessly even if you are not our customer. It will be a
level-playing field for all banks,” said K.A. Babu, head of retail business at
Federal Bank Ltd.
UPI could also
potentially challenge the business model of mobile wallet providers who have
flourished because of the convenience they offer to customers when compared
with mobile banking services. If UPI is widely accepted across the banking
sector, the need for wallets could reduce.
“UPI will allow
access to a bank account through a single interface. This means the payments
space will see reduction in the number of transaction failure. In case of
wallets, it will get much simpler to load money. You will no more need net
banking or credit card details to load money because one virtual address will
do the job for you,” said Amrish Rau, managing director, Citrus Payment
Solutions Pvt. Ltd.
“The downside of
this is those wallets which function only to solve the problem of second factor
authentication will struggle to grow as transactions in bank accounts becomes
seamless,” Rau added.
A move towards UPI
and other modes of electronic payments will also allow for better cost
management by banks with ample cross-selling opportunities, said the JM Financial
report cited above.
It would also lead
to higher competition among banks and give financial inclusion activities a
fillip, it added.
As part of its
strategy to expand its product portfolio, NPCI is also launching four other
products in the financial year starting 1 April. The products include Bharat
Bill Payment System (BBPS), electronic toll collections, Rupay
credit-plus-debit card and a tap-and-go transit card.
The new products
will help NPCI increase monthly transactions to 1 billion from its current 570
million.
NPCI plans to test
the BBPS service in June and the scheme will be rolled out across India by
December, Hota said. BBPS will be a centralized bill payment system that will
allow customers to use a single website or outlet to pay all cyclical bills
such as for electricity, cable and mobile phone.
“Right now we have
4-5 banks with us. We are in the process of identifying billers from categories
such as electricity and telecom service provider. Right now, solution
development work is on,” said Hota.
BBPS is an
RBI-mandated scheme where NPCI was appointed as the central unit and the
operator, he added.
NPCI is also set
to conduct testing for a tap-and-go mass transit card in March through a
Bangalore bus service. Axis Bank has agreed to become the first banker to issue
these cards and over a period of time other banks are likely to join, Hota
said.
“Once the pilot is
successful in Bangalore, the ministry of urban development has indicated that
they will adopt it and name it National Common Mobility Card. It will be
adopted as the standard for 100 smart cities and will be seamlessly usable
across the country,” he said.
NPCI is also
planning to launch a product for electronic toll collections, where a tag can
be placed on a vehicle and it can automatically approve payments at any toll
station without having the need to stop and pay in cash. Such a product was
launched by ICICI Bank Ltd in association with National Highways Authority of
India in 2014 on the route between Mumbai and Delhi. NPCI plans a nationwide
rollout.
The fourth product
in the pipeline for NPCI is a Rupay credit card.
“The procedural
timeline for credit card is getting framed and banks are being consulted. This
will be an entry for Rupay to be fully functional card and not for just debit.
We want to go operational in June-July,” Hota said.
NPCI is exploring
the possibility of a credit-cum-debit card as well. Though this is still in the
discussion phase, as banks will have to make changes at their payment terminals
to facilitate such transactions, Hota said.
NPCI, which was
incorporated in December 2008, has 10 promoter banks.
They are State
Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of
India, Bank of India, ICICI Bank, HDFC Bank Ltd, Citibank and HSBC.
http://www.livemint.com/Industry/ZA9pPkeGdY9wrChh1BDQhN/NPCIs-unified-payment-interface-to-start-in-April.html
Advantages
1. UPI will allow seamless, inter-bank connection using a mobile app that can be used to pay merchants. This would eliminate need of carry plastic cards when you go shopping.
2. One can send money to you or you can send to someone else.
3. In existing system you give your card to the merchant and there is a security risk. In UPI, everything happens through your own phone, your credentials are established and payment is approved.
4. The UPI has a level playing field with no gatekeepers. We can use it to fundamentally change the way we do business or improve any government service or process.
The technical introduction launch of UPI was recently done in Bengaluru.
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