UPI 2.0 will disrupt payments in India
The upgraded version will focus on integrating Unified Payments Interface with Aadhaar and the Bharat Bill Payment System
A month after introducing mobile-based payments architecture Unified Payments Interface (UPI), the National Payments Corporation of India (NPCI) is working on an upgraded version of UPI, to be released next year, that will contain features such as pre-authorized transactions and biometric authentication.
The new version of UPI, to be called UPI 2.0, will include new features such as electronic mandates that will allow users to pre-authorize transactions through digital signatures, as NPCI gears up to get tens of millions of new users on board UPI over the coming months.
“Once we reach about 30 banks including State Bank (of India or SBI) and HDFC Bank (Ltd), we will start an awareness campaign. We will also add new use cases of UPI technology such as merchant payments and bill payments. We have also planned a UPI version 2.0 for March 2017,” said A.P. Hota, managing director and chief executive of NPCI, in an email reply to queries from Mint.
In August, NPCI with the support of the Reserve Bank of India (RBI) and the Indian Banks’ Association created UPI and launched it in August. The system allows customers to safely and instantaneously pay for goods and services and transfer funds to others via their smartphones, almost as easily as sending a text message.
Since the launch of UPI, 20 banks have launched their UPI-based apps and mobile apps of 17 are available on the Google play store, Hota said. SBI and HDFC Bank are to join UPI soon.
Currently, on a daily basis, about 4,000 transactions are taking place from about 300,000 customers who have downloaded a UPI-based bank app, he added.
Other executives associated with UPI said the upgraded version will be compatible with the first version.
“UPI 1.0 will continue to mature…with better UI (user interface) and better features,” said Pramod Varma, chief architect at the Unique Identification Authority of India (UIDAI) and technical adviser to NPCI. “UPI 2.0 is an extension of additional capabilities and one of the big ones is electronic mandates that would come which allows me to need not authorize every transaction—I can pre-authorize through a digitally signed instrument
UPI 2.0 will be focused on integrating UPI with Aadhaar and the Bharat Bill Payment System (BBPS), said Dilip Asbe, chief operating officer of NPCI.
“By integrating with Aadhaar, it will enable iris authenticated (UPI) payments…we are hopeful to get RBI approval (for the same)… In case of BBPS, a user can do a card payment or use Internet banking (to make payments), we’ll integrate UPI as an additional mode of payment (to BBPS),” he added.
Axis Bank Ltd is one of the early bank adopters to launch its UPI mobile app a month ago. Since then, 100,000 users have registered and created a virtual payment address, said Sangram Singh, head (cards and payments business) at Axis Bank. The lender’s platform has clocked 60,000-65,000 transactions amounting to Rs8.5 crore since late August.
Currently, on a daily basis, about 4,000 transactions are taking place from about 300,000 customers who have downloaded a UPI-based bank app
Some banks are tying up with start-ups for UPI. For instance, Flipkart-owned PhonePe Internet Pvt. Ltd tied up with Yes Bank Ltd to launch a consumer-facing app in August.
Razorpay Software Pvt. Ltd, an online payment gateway for merchants, has partnered with several banks to offer payments on UPI. Another payment gateway Instamojo Technologies Pvt. Ltd has partnered with ICICI Bank Ltd to allow individuals and small businesses to collect payments via UPI on its platform.
“So far we’ve managed to get about 1.5 lakh micro-SMEs and merchants on board our platform,” said Instamojo founder Sampad Swain.
In an interview, Infosys Ltd co-founder Nandan Nilekani said UPI will potentially disrupt payments in India and become a role model for other countries