How UPI is Driving India’s Shift from Cash to Digital Payments

The economy of India was dominated by the use of cash half a decade back. There were only a few online payment methods such as National Electronic Funds Transfer (NEFT), and Real-Time Gross Settlement (RTGS). However, the tables turned with the birth of the vision for cashless India. The Reserve Bank of India wanted to make the existing payments system strong and streamline the settlement system with simpler and safer digital payment methods. A huge revolution occurred in the economy of India with the development of the UPI payments system- a real time payments platform.

An overview of the unified payments system

The UPI payment system was developed & is regulated by the National Payments Corporation of India (NPCI). The ulterior motive if this collaboration was cashless economy driven digital payments.

The UPI payment system synced perfectly with the increased use of smartphones. It is a mobile-based payments system allowing instant transfer or collection of funds between two accounts or two banks. Once you have registered your account with UPI, you need not go through the hassle of typing account number and other bank details every time you make some transaction. You can download any of the UPI apps from the play store and log in using your respective mobile number registered with the bank. You have to set a UPI pin, which is to be during every transaction.

They are used for both Peer-to-Peer (P2P) and Peer-to-Merchant (P2M) transactions. It can also be used for various value-added non-financial transactions like checking real-time balance and history of transactions.

What is the reason for traction among the masses?

The interoperability of the payments system and its ease of use interface make it popular and stand out apart from other payment solutions. The portable nature of the bank adds to the popularity of the real-time payment solution. This means that you can link your bank account to a UPI app provided by another bank or any app such as Google Pay. Also if a user has multiple bank accounts, they can link to a single UPI app. This drives easy payment from one account to another without entering different account numbers each time. When convenience is the key, its popularity cannot be questioned.

The simplicity of transactions is achieved by the use of a virtual payment address. The VPA searches and identifies themselves with another consumer without providing the bank account details. The VPA also helps in lowering the risks of fraud.

A wide array of features has paved the way for such huge popularity of the UPI solution. Apart from being a robust payments system for personal transactions, UPI offers great benefits for businesses. Merchants can use their mobile as a tool for the acceptance of payments. This brings down the cost of transactions compared to the traditional system like Point of Sale (POS) and QR code-based payments. The upgraded version of UPI offered benefits to the merchants such as pre-authorize a transaction, overdraft accounts on UPI, and stronger verification.

Unified Payment Interface Solution

We at finacus provide the best Unified Payment Interface (UPI) platform with an API interface and mobile interface for consumers. It helps in addressing today’s digital transaction challenges with a simple interface.

Bottom line

With about three forth merchants using UPI solutions, it is time for you to adopt a robust UPI platform. Know more about our solution FinUPI. Ask for a Demo Now.

How Can Digital Transactions Grow With UPI System

India has seen a huge transformation in the banking sector and economy over the past decade with the implementation of Jan Dhan Yojana scheme. The country is on its way to building a strong and prosperous economy with various banking solutions that bring people of all sectors under one umbrella. With the onset of digital payment software usage in India many came up with robust platforms. One such platform that made digital transactions in India more refined is the Unified payment’s interface. UPI was introduced by the National Payments Corporation of India in the year 2016. Over the past 4 years, digital transactions in India have seen new heights with the UPI payment system as the platform.

What is UPI?

The UPI is a simple and easy-to-use platform that is designed to transfer money between two parties. The UPI payments system allows interoperability and real-time transfer of funds with the help of a mobile number and a linked bank account. You can instantly transfer funds between two bank accounts with the account number of the beneficiary. The added benefit of the app is that you can link various bank accounts to a single banking app. Noticing the spike in popularity of the UPI system; the NPCI launched UPI 2.0 in august 2018. The 2.0 version is an enhanced version with features for sophisticated transfer of funds. The latest feature of UPI 2.0 is a reflection of how digital transactions have improved and increased over the past four years.

One-time mandate

In the latest version of the UPI system, the users can pre-schedule a transaction and pay later. The mandates of UPI 2.0 are designed to sport a one-time block functionality in whichthe transaction is committed in present and processed later. This has been a huge convenience for the users as the instant mandate generation leads to an automatic reduction of payments on authorized dates. This has provided individuals relief from the hassle of remembering endless bills generated at the start of every month.

Verification of invoice

The latest version of UPI payments has focused on making transactions easy for merchants as the days when merchants waited in a long queue for transfer of funds in the bank has long gone. Merchants can dispatch online invoices to the customers who can view the amount of orders and other relevant details of payments. Customers can also check the authenticity of the merchants by scanning their QR codes thus preventing the rise of fraudulent activities.

Use over-draft account

The merchants can withdraw money from their account even if it is cash-deficit.

UPI is the game-changer

In India, UPI has been the game-changer in the payment space of India and over the years it has become one of the fastest payment modes that have brought financial inclusion to the masses. Let us take a look at some facts that owe towards growing digital transactions in India with UPI.

  • Within January and December 2018, UPI saw 7x growth
  • The adoption of UPI grew in tier 2 and tier 3 cities apart from tier 1 cities.
  • In February 2020, recorded around 1.32 transactions that is worth INR 2, 21,995 crore
  • This is a growth of 1.4 percent from 1.30 billion in January of this year.
  • According to a report by world line UPI is the most preferred mode of online transaction in 2019
  • All the records were broken in December 2019 by UPI with 1.30 billion transactions worth INR 2 trillion.

Bottom line

These numbers are not going to stop here as the adoption of UPI solutions by people is increasing day by day. The UPI has proven to be one of the most downloaded apps in the year as digital transactions are more preferred than ever before.

Unified Payment Interface: The revolution in Banking Sector

UPI or as more commonly known as Unified Payment Interface is without a doubt a revolution in the entire banking industry. This is simply because of the ease of use it offers for both the users as well as the merchants and also the financial institutions. Let us take a deeper look to understand all of this better. Continue reading