In an attempt to make payments hassle free and more secure, the Government of India has started initiating the movement towards digital payments using UPI. Conceived by Dr Raghuram Rajan, the RBI developed the UPI as an innovation to drive the country towards a cashless economy. Unified Payments Interface (UPI) is a technology-driven innovation introduced to enable and link multiple bank accounts with a single mobile number using a mobile application.

It facilitates operation by seamless fund routing, merging banking features, balance querying and merchant payments. It also addresses the requirements surrounding “Peer to Peer” transaction payments which can be scheduled and paid as per needs. There are a few UPI Applications (like PhonePe, SBI Pay) for different smart phone operating systems like Android and Windows.

However this is a planned movement away from the Digital e-Wallets where the funds  reside with an intermediary. Therefore onus of protection, and hence the liability of that money lies with the intermediary and not with the bank. Regulatory guidelines enforce certain restriction on the value of transfers which is feasible to protect the future interests of user groups.

One such Mobile App which has been recently introduced and uses UPI based innovation is PhonePe. Introduced by Flipkart, this App is already attracting a lot of attention due to its fantastic user friendly features. Some of the USPs of PhonePe are as follows:

  • High level of information and financial security of money through the use of MPIN
  • One does not need to expose bank account details to the receiver of funds, who gets a transfer based on an email like alias.
  • The receiver also needs to only provide an email like alias of the bank account, therefore protecting account information privacy and security.
  • Direct bank-to-bank account transfers using only the registered mobile number is possible.

Although at the background, the technology and the subsequent processes are a lot different, the UPI based digital payment options offer a lot of comparative benefits over other E-wallets, which became popular recently after the announcement of demonetization. UPI based apps like PhonePe have provisions for a much higher transaction limit for each user. For example one can transact up to a maximum of 30 Lakhs Rupees per month as compared to a maximum of 20,000 Rupees for most wallets, with a daily limit of up to 1 Lakh Rupees. This limit makes it convenient for most retailers and wholesalers too to adopt the technology, unlike wallets. Further since the money stays in your bank account, and one can use it as per needs while it accrues the interest as per the on-going rates. So there is no need to pre-load money in the application, like in the case of wallets. PhonePe for example is promising zero transaction charges for lifetime (while wallets will have to pay transactional charges post December 31, 2016). So to try out this UPI based innovation, download the PhonePe app and use it directly for all transactions.

By Kar

Dr. Kar works in the interface of digital transformation and data science. Professionally a professor in one of the top B-Schools of Asia and an alumni of XLRI, he has extensive experience in teaching, training, consultancy and research in reputed institutes. He is a regular contributor of Business Fundas and a frequent author in research platforms. He is widely cited as a researcher. Note: The articles authored in this blog are his personal views and does not reflect that of his affiliations.