You are here: Home » Companies » News
Business Standard

Wake up to a new payments regime today

The launch was delayed by around a month from the July 31 deadline set by NPCI because some lenders were not prepared

Nupur Anand  |  Mumbai 

Wake up to a new payments regime today

The (UPI), the new that is set to revolutionise the way consumers make payments, is set to go live on Thursday.

"We will launch UPI tomorrow evening and we have 21 banks on board," said A P Hota, managing director and chief executive officer, National Payments Corporation of India (NPCI), on Wednesday.


The launch was delayed by around a month from the July 31 deadline set by because some lenders were not prepared. It was also deferred because had said only lenders with 1,000 pilot customers, 5,000 transactions and 90 per cent success rate would be allowed to go operational. Initially, 29 banks had tied up with However, only 21 have been able to meet the criteria. Some major lenders such as the State Bank of India have not been able to meet the deadline.

UPI is expected to boost mobile money transfer. It will be built on the existing Immediate Payment Service that allows real-time transfer of money and is interoperable across banks.

By using this application, a customer can transfer money to another person through a unique virtual address (virtual addresses are aliases to bank accounts allowing a customer's account to be uniquely mapped), or mobile number, or Aadhaar number. Neither the payer nor the payee have to share bank account details.

WHAT IS UPI?
An application that will make money transfer as easy as sending a text message by allowing real-time money transfer.
How will it work?
By using this application, a customer can transfer money to another person through a unique virtual address (virtual addresses are aliases to a bank account allowing a customer's account to be uniquely mapped), or mobile number, or Aadhaar number. Therefore, customers do not need to know the payee's bank account details, etc, and this will make the process simpler.

How does it score over existing payment methods?
Apart from doing away with the need to know someone’s bank account details, one can also raise payment requests and ask for money.

 
The other advantage is that a seller can also raise a payment request. As a result, it is also expected to be used by merchants to raise invoice requests.

Unlike wallets that users need to pre-load, UPI will work seamlessly with a user's bank account through IMPS. A credit or debit card needs to be swiped at merchant establishment physically, or card details need to be provided in case of online shopping. With UPI, customers can shop with their virtual addresses and do not need to provide any financial detail.

Wake up to a new payments regime today
According to a JM Financial report, India is still a cash intensive economy with a cash to gross domestic product ratio of around 12 per cent. According to estimates, 95 per cent of consumer transactions by volume and 65 per cent by value in India are carried out in cash. This compares with 40-50 per cent transactions by volume and 10-20 per cent by value for advanced economies. Banks and analysts expect cash transactions to come down in India over the years.

First Published: Thu, August 25 2016. 00:57 IST
RECOMMENDED FOR YOU