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Special Content


Issue no 11, 11 - 17 JUNE 2022

Path-Breaking Initiatives Undertaken By The Government Over The Last 8 Years

Part II - Unified Payment Interface (UPI)

India's digital payments system has evolved rapidly over the last few years. This has been encouraged by various developments in information and communication technology and by forward looking regulatory and Government policies. The trinity of near universal account penetration, increasing smartphone penetration and low cost payments rails has led to a never-before boom in digital transactions. In 2016, UPI became a game changer in India's digital payment landscape.

Prime Minister Shri Narendra Modi launched BHIM UPI (Bharat Interface for Money - Unified Payments Interface) app during the inauguration of the 'Digi DhanMela' on December 31, 2016 and urged people to make digital payments a habit to transform the country into a cashless economy. The vision of the Government has been to provide a facility of seamless digital payment to all citizens of India in a convenient, easy, affordable, quick and secured manner. Since April 2016, UPI has become synonymous to a rapid digital payment which has seen an exponential growth trajectory to cross over 500 crore transactions a month.

Pioneered and developed by National Payments Corporation of India (NPCI), the umbrella organisation for all retail payments systems in the country, UPI leverages trends such as increasing smartphone adoption and deeper penetration of mobile data. UPI empowers users to perform instant push and pull transactions seamlessly which has transformed the way people make payments today.

What is Unified Payments Interface or UPI?

UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. UPI is a unique payment solution which empowers the recipient to initiate the payment request from a smartphone. It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.

Through UPI, one can link their bank account to a mobile application and make transactions safely. From transferring money to friends to paying merchants, from online shopping to paying utility bills, UPI makes transferring money easy, safe, and instant. It also provides an option for scheduling push and pull transactions for various purposes like sharing bills among peers.

 UPI facilitates ‘virtual address’ as a payment identifier for sending and collecting money and works on single click, 2 factor authentication. The interface is the advanced version of NPCI’s Immediate Payment Service (IMPS) which is a 24x365 funds transfer service. In order to ensure privacy of customer’s data, there is no account number mapper anywhere other than the customer's own bank. This allows the customer to freely share the financial address with others.

UPI Logo

 India is heading towards a digital future with BHIM UPI assisting in its growth by taking a progressive initiative to make the country a cashless society. The tricolor arrows, created by combining the fast-forward symbol with our National flag and taking inspiration from the stance of an athlete, visually capture this statement.

Benefits of UPI

UPI has numerous benefits for the customers. It is available round the clock, enables immediate money transfer through mobile device round the clock 24hours and 365 days, provides a single platform for accessing different bank accounts, enables single click authentication, ensures secure transactions through the use of virtual ID with the customer not required to enter the details such as Card No, Account Number; IFSC etc., facilitates Utility Bill Payments, Over the Counter Payments, QR Code (Scan and Pay) based payments and also facilitates the customer to raise complaints from the mobile app directly.

Merchants enjoy seamless fund collection from customers; there is no risk of storing customer’s virtual addresses like in cards; and they are able to tap customers not having credit/debit cards. UPI is also suitable for e-commerce and mcommerce transactions and resolving the COD collection problem.

Apart from these users, UPI has also helped banks to reduce cash requirements on channels like ATMs and branches resulting in reduction in operational costs and improving customer experience. It can also anchor a broader suite of fintech applications like micro-pensions, digital insurance products, and flexible loans. These are custom solutions created by Indian technology companies, on the public infrastructure of UPI. Tech companies are increasingly leveraging the power of UPI to expand the digital ecosystem and this has led to a great acceleration in the pace of financial inclusion.

UPI outside India

Various steps have been taken by the Reserve Bank of India (RBI) to expand the reach of UPI outside India. NPCI International Payments Limited (NIPL), a wholly owned subsidiary of NPCI, is devoted to the internationalisation of UPI. NIPL has undertaken various initiatives across nations to enable cross-border acceptance of BHIM UPI QR at merchant establishment. These partnerships will facilitate Indian travellers to make payments using the BHIM UPI QR for all their retail purchases at international merchant establishments. For instance, BHIM UPI QR has gained acceptance in Singapore (March 2020), Bhutan (July 2021), UAE and Nepal (February 2022).

Noteworthy Statistic

Total digital transactions which were 1,004 crore in FY 2016-17 have seen exponential growth post the launch of UPI. During FY 2017-18, 106% growth was witnessed taking the tally to 2,071 crore transactions.

In FY 2018-19, UPI accounted for 17% of the total 31 billion digital transactions in the country. The next fiscal year saw UPI’s share rising to more than 27% as it processed 12.5 billion transactions of the total 46 billion digital transactions.

In FY 2020-21, UPI accounted for 40% of the total 55 billion digital transactions. To put these numbers in context, the value of transactions on BHIM UPI amounted to 15% of India’s GDP in FY 2019-20.

Till April 2022, 316 banks were live on UPI with 558.3 crore transactions amounting to nearly 10 lakh crore in value.

Compiled by: Annesha Banerjee and Anuja Bhardwajan

Source: NPCI/PIB