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Launch of Unified Payment Interface deferred

23 out of 29 banks are expected to be ready with the new payments platform, which was to be launched today

Nupur Anand  |  Mumbai 

Now, transfer your money via SMS

The launch of the new money transfer platform — Unified Payments Interface (UPI) — that is expected to dramatically change the way we transact has been delayed. The National Payments Corporation of India (NPCI) that had set July 31st as the deadline for the rollout has decided to push it by one week.

"We want to be sure about a few things before we launch the application. At the moment we are testing the application by 23 banks and it is in the last lap. We are expecting banks to launch it soon," said Dilip Asbe, Chief Operating Officer, NPCI.

NPCI had kept an internal criteria that only lenders with a thousand pilot customers, five thousand transactions and 90 per cent success rate would be allowed to go operational by July 31.Twenty-nine banks had initially tied up with NPCI for the launch of this services that was set to happen this month.

The launch of the UPI is being awaited as it is expected to give a significant boost to mobile money transfer. Here is all that you need to know about this next generation payments system which is being touted as the “Whatsapp moment” for India.

Launch of Unified Payment Interface deferred

What is UPI?

The UPI application of a bank will make money transfer as easy as sending a text message. UPI will be built on the existing Immediate Payment Service that allows real time transfer of money 24*7. It is also interoperable across banks.

How will it work?

By using this UPI 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. And therefore, customers do not need to know the payee's IFSC code, bank account details, etc and this will make the process simpler.

How does it score over the 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. So if someone has to raise an invoice and ask for money, they can send a payment request. And because of this feature it is being expected that apart from consumers, even merchants and companies will widely use this platform.

How will it change the mobile money landscape?

As per a JM Financial report, India is still a cash intensive economy with a cash to GDP ratio of over 12 per cent. As per estimates 95 per cent of consumer transactions (volumes) and 65 per cent (value) in India are carried out in cash. This compares with 40-50 per cent (volumes) and 10-20 per cent (value) for advanced economies. However, UPI is expected to change this landscape as transferring money will become as simple as sending messages.

How will it benefit banks and other players?

A 2014 report on ‘The Cost of cash in India’ commissioned by MasterCard had pegged the estimated annual cost of currency operations in India at Rs 21,000 crore. By moving to a less cash economy, this cost can be significantly brought down. So far wallet players have not been allowed in this space as a result lenders that were facing a tough competition from the non-bank wallet players will now stand to gain.

First Published: Sat, July 30 2016. 22:05 IST