UPI Payment System in India Broke the World Record.

UPI Payment System in India Broke the World Record.

UPI Payment System in India Broke the World Record.
Snapshot
With almost 6 billion transactions a month, valued over Rs 10 lakh crore and touching 260 million users, India’s UPI has end up the exceptional performing real-time environment within the international.

Merchants in 10 international locations now be given UPI payments.

Digital payments have overtaken credit score playing cards in India; RBI now allows UPI bills thru credit score card.

Two weeks ago, a observation on digital bills on the internet site of the USA commercial enterprise magazine, Fortune carried a provocative headline: “As Silicon Valley fantasizes approximately Web3.Zero, India leaps ahead on payments”.

It reminded American readers that Bitcoin and Blockchain which have been touted to transform worldwide trade, are yet to deliver on their promise. Another lots-hyped technology, Web3.Zero which became to make it all appear, remains a work in development.

Meanwhile, wrote the authors: “India is racing in advance and implementing what the crypto crowd had promised – with its Unified Payment Services.”

UPI, the instant actual-time fee machine developed through the National Payments Corporation of India (NPCI) in 2016, for facilitating inter-bank transactions, has morphed into a simple, uncomplicated cell bills option, embraced via Indians in brilliant numbers.

According to NPCI, the cost of 595 crore (5.95 billion) transactions on UPI all through the month of May 2022, crossed the Rs 10 lakh crore mark (10 trillion) for the primary time (the precise range changed into 10.41 lakh crore).

By reducing out intermediaries, UPI is doing exactly what blockchain is meant to do – and by means of making it (for now at least) a payment mechanism that is freed from transaction prices, it has attracted 26 crores (260 million) specific customers and five crore (50 million) merchants in India alone.

And its makers at NCPI cannily located its protocol in the public domain, so that others may want to construct their technology on top and customise it for their customers – a lesson properly learnt from the revel in of Open Source in the pc global.

As a end result, the attain of UPI is near ubiquitous in India – with over 300 banks providing their linkages thru the UPI users financial institution account. And similarly to the NPCI’s mother app, BHIM, a few 50-plus 1/3-party players offer UPI-enabled apps.

The top UPI apps are GooglePay, PhonePe and Paytm, with WhatsappPay and AmazonPay developing rapid. Interestingly, 4 of those are owned by way of global entities — GooglePay (through its determine Alphabet), PhonePay (Walmart via its acquisition of Flipkart), AmazonPay (Amazon) and WhatsApp (Meta, formerly Facebook).

Digital Jugaad: Giving UPI, A Voice

First demonetisation, then the Covid pandemic, forced hundreds of thousands of Indians to embody cashless transaction for their every day buying and payment desires – and the simplicity of a UPI app on a clever cellphone of which there are 750 million in use India, has made UPI nearly a default app on every handset.

For tens of millions of small traders, kirana keep keepers, hand cart vegetable vendors, mandi dealers, a UPI supplier app ensured that they might preserve to do commercial enterprise. Many of them are hard pressed to reveal the text messages that confirm that a consumer has made the price.

So, in what is a nice example of right-old Indian jugaad, Paytm, PhonePe and others, have created UPI packing containers for his or her clients – with a built-in loudspeaker that gives voice confirmation of a fee obtained.

But what of the other 300 to four hundred million – folks who personal a fundamental feature smartphone, i.E., a non-clever cellular phone? In March this 12 months, the Reserve Bank of India released an initiative – UPI123Pay – which gives characteristic telephone owners an app that permits them with most UPI features.

And in May 2022, RBI further prolonged the attain and utility of UPI by way of directing banks to allow clients to withdraw cash (as much as Rs five,000) at ATMs in a card-less transaction, the use of the UPI app on their phones. Most huge banks have already complied.

Earlier this week, worldwide records offerings and credit score reporting company, Experian, released India-particular findings from its Global Insights document. It discovered that digital payments had overtaken credit card payments in India, with an awesome ninety one in line with cent of clients who prefer online payments and digital wallets to standard charge methods.

Almost watching for this locating, RBI made a relatively surprising declaration in its Monetary Policy Committee in June this year; it allowed a linkage of credit cards to UPI payments.

Wag The Dog: Credit Card-UPI Sangam

This turned into a canny move: Many small traders don’t personal and couldn’t find the money for a credit card Point of Sale (PoS) terminal, however almost all of them used a phone-primarily based UPI price machine.

Allowing credit card holders to pay the usage of their UPI app, may additionally grow to be an stimulated circulate, opening up the UPI atmosphere even similarly, even as it breathes existence into the credit score card business in India, which has been hardly growing with a 30 according to cent market share of the payments business.

For starters, the NPCI-supported RuPay charge community has released the credit score card-UPI link and Visa, Mastercard, Diners, American Express are anticipated to follow fit for hard-nosed reasons. A case of the tail wagging the canine?

It is in instances of disaster that a technology is placed to real test: Branchless banking and virtual bills have helped clients reap essential banking services in catastrophe conditions like floods and cyclones.

Even as floods ravage the Odisha coast and elements of the North East, progressive UPI-fueled, Aadhaar-based totally answers from the Indian fintech startup ecosystem – literally – bridged the gap.

In Assam closing month, PayNearby, a virtual payments player which has over 50 lakh micro marketers as customers India-wide, despatched out an military of business correspondents, walking or in small boats, armed with micro-ATMs and hand held biometric gadgets to provide coins to lakhs of the flood ravaged, at their doorstep.

PayNearby staffer providing offerings on a boat in Assam throughout current floods
PayNearby staffer presenting services on a boat in Assam during current floods
Going Global

Even as UPI continues to bridge the payment hole for tens of millions in India, its authors had a bigger – international – imaginative and prescient. In April 2020, NPCI launched a subsidiary, NPCI International Payments Ltd (NIPL), to take UPI to overseas markets.

Nepal will soon be the first to allow UPI united states-huge with the backing of the Nepal Rastra Bank.

Today, merchants in Bhutan, Cambodia, Malaysia, Philippines, Singapore and Vietnam already receive UPI payments, way to cross border price agreements.

In April this yr, the BHIM UPI app went stay all over the UAE, at NeoPay terminals operated with the aid of Mashreq Bank. Indian-starting place residents and tourists in Dubai, Abu Dhabi and other Gulf centres, can now pay for purchases with the same app they use in India.

The reach of UPI isn’t always restrained to Asia or the Middle East. France can be the first European u . S . Where UPI can be used. IT Minister Ashwini Vaishnaw announced remaining month that NPCI had signed an MOU with French payments company Lyra Networks to kickstart UPI’s French Connection.

At domestic and abroad, the made-in-India digital bills gadget this is UPI appears to be looking at persisted increase. A June 2022 have a look at for PhonePe through the Boston Consulting Group entitled “Digital Payments in India: a $10 trillion opportunity” observed that the digital payments industry in India became enroute to quadrupling from the contemporary $3 trillion to $10 trillion via 2026.

Digital non-coins payments would then account for 2 out of each three payments in India.

“(UPI) is turning in a real revolution, that flies under the radar of (western) tech authorities”, concludes the Fortune article which is co-authored by Vivek Wadhwa, Indian-American entrepreneur, Distinguished Fellow of Carnegie-Mellon’s School of Engineering and a long-time observer of the India Technology scene.

But in truth, he indicates, “India could be very astutely leaping ahead of the sector.”

Biswajit Barman
Author: Biswajit Barman

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