Introduction

Digital Economy took a giant leap with the launch of Unified Payment Interface (UPI) in India.
Conceived and developed by the National Payment Corporation of India (NPCI) , UPI has made
an effort to move the country towards a cashless model of payment. Demonetization was an
eye-opener to let the common masses use digital medium to facilitate their transactions in a
smooth way. The Unified Payment Interface (UPI) facilitates instant fund transfer between two
bank accounts on the mobile platform. It also helps a customer to pay directly from a bank
account to different merchants, both online and offline, reducing the hassles of typing credit
/debit card details, IFSC Code, Netbanking/ Wallet passwords.

The above diagram makes the functioning of UPI very clear. A customer wishes to make
cashless payments via the UPI system has to first “Download” and “Install” the UPI app of the
concerned bank in which he is an accountholder. For example, if the customer is a Yes Bank
accountholder, he has to download and install the “YES PAY Wallet with UPI” app in his smart
phone. Once the installation of the app is over, the customer has to register and create a
password as well as link his bank account. The next step is to create a VPA (Virtual Payment
Address) to facilitate the transactions. The VPA is an address given to the UPI user to help in
fund transfers. This VPA replaces the bank account details. After the creation of VPA, the
customer has to register his mobile number to generate MPIN (Mobile PIN). This MPIN is a 4-
digit (sometimes 6-digit) code which helps to make all the transactions safe. Then the customer
is ready to transact through is mobile easily.
With the help of UPI a customer can also pay many merchants while shopping or paying utility
bills.

To do transactions without cash like buying some merchandize or paying utility bills, UPI is also
helpful. For this the user has to download the specific UPI app, select UPI as the mode of
payment , use the Virtual Payment Address, register Mobile Number and generate MPIN. Once
this is complete, the buyer enters the MPIN and authenticates the transaction. The UPI backend
system checks the buyer credential and the requisite purchase amount is debited. At the same
time a mobile message is generated and delivered to both the payer and the merchant. The
merchant account stands credit by such transfer of money.

The objective of introducing UPI is two-fold: to achieve the goal of a lower cash-intensive
society and wide usage of latest technology to enable financial inclusion.

Important information pertaining to UPI:

 The UPI app of 35 Indian banks is available on Google Playstore in any Android smart
phone
 UPI is safe as the customer only needs to have a Virtual Payment Address (VPA) and
there is no need to provide any other sensitive information
 The per transaction limit is Rs.100,000
  UPI app is interoperable between banks, meaning only one single account can help in
money transfer between two distinct banks
 The fee charged per transaction is Rs. 5 plus service tax which is the same for any
Netbanking transaction

Spotting New Opportunities

After the launch of the UPI, it became a rage across the length and breadth of the country. UPI
soon started exploring new avenues of expansion. Union Minister of Textiles Smt. Smriti Irani
and Minister of State for Development of North Eastern Region (I/C), Atomic Energy and Space,
Dr. Jitendra Singh launched the UPI cashless payments at Purbashree Stalls at Delhi Haat, New
Delhi. This launch of the e-vending machines and immense importance attached to cashless
transaction has been taken as a favourable gesture by the small textile traders, which has
helped their trade to prosper.

News flashed about linking the PMJDY (Prime Ministers, Jan Dhan Yojana) with the UPI app last
year in September, 2016. This was made fruitful with the launch of the BHIM (Bharat Interface
for Mobile) app by our Hon’ble Prime Minister Narendra Modi in the month of December last
year. BHIM was a step taken forward to empower the economically downtrodden masses and
think about their upliftment. It was also an emphasis given to the Governments thrust on
financial inclusion in the years to follow.

Due to the effect of demonetization, people began to use digital payment modes frequently.
UPI became one of the most reliable source of digital payment. A representative data of digital
transactions in India as on January, 2017 showed that UPI-based dealings surged from 0.3
million in November, 2016 to 4.2 million in January, 2017. In rupee terms, it translates from just
91 crores in November, 2016 to 1,666 crores as on January, 2017.

The latest opportunity identified is the Truecaller partnership with ICICI Bank for enabling UPI
payments. According to the reports, ICICI Bank has partnered with the Swedish communication
company to enable in-app payments using the Unified Payments Interface. Truecaller is the
third most used app in India and this new found partnership will allow millions of users of the
app in the country to create an UPI id instantly, send money to any registered mobile number
who uses a UPI id . Users will also be able to recharge their registered mobile numbers using
the Truecaller app.

UPI has of late become such a success that Visa and MasterCard had been constantly lobbying
the government to make sure that they do not lose out their market share because of the rise
in digitalized cashless payment. This has put much pressure on the business of card companies
which is worth Rs.6,000 crore. On top of all these things, the PM has launched Aadhar Pay or
Aadhar Enabled Payment System (AEPS) recently, which might put a question to the growth
potential of the card business in the country. The government however, has planned to carry on
with its digitalized payment drive.

Last month, National Payments Corporation of India (NPCI) has confirmed that no vulnerability
has been reported in the BHIM or UPI applications. NPCI Managing Director and CEO, AP Hota
had said that the environment in which BHIM or UPI is run by the corporation is highly secure
and certified with best global practices like PCI DSS ISO 27001 and also audited by reputed IT
security firms.

The Road Ahead

UPI has a long way to go ahead and it has already started tasting success. Various initiatives
taken by it during its inception a year back are as under:

 Online travel agent Yatra.com is the first one to have introduced UPI as a paying method
on its website. For technical integration related to payment, it has tied up with ICICI
Bank.
 Reserve Bank of India (RBI), the apex bank of the country, has taken the decision to
open up UPI for digital wallets Paytm and MobiKwik. This is a drive to let the
interoperability between wallets to make the digital payments drive a success.
 Jet Airways has opened up the options for general public to buy tickets online on its
website, mobile site and mobile app by using UPI. By the introduction of this service, Jet
Airways becomes the only Indian airline to provide guests with a convenient payment
solution.
 The data from RBI speaks volumes about the popularity of UPI transactions, which has
jumped almost 20% to Rs. 2,000 crore in March, 2017 from Rs.1,660 crore in January,
2017.
 Mobile payment application Chillr has plans to use the UPI platform to add more
customers who are expected to transact business volumes worth Rs.6,600 crore every
year.
 SpiceJet followed suit by partnering with HSBC India to use the UPI platform to attract
customers to transact online and book tickets with convenience. The airlines claimed
that with the introduction of this system of payment, the experience of customers is
enriched.