Industry Odisha Bureau, Jun 28: With the advent of modern technology, more use of a smartphone and the enhanced speed of of internet, the UPI (United Payments Interface) has reportedly started overtaking the traditional money transactions these days by most of the Indians, both urbanites and rural folk, and especially, the techno-savvy teenagers since money moves today at the speed of a tap.
Developed by the “National Payments Corporation of India (NPCI) in 2016, the UPI (United Payments Interface) is regarded as an Indian instant payment system and protocol that facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions.”
Used on mobile devices to instantly transfer funds between two bank accounts using only a unique UPI ID, it is being “regulated by the Reserve Bank of India (RBI), and major Indian banks started making their UPI-enabled apps available to customers reportedly in August 2016, while it is reportedly supported by almost all Indian banks today.”
So far the NPCI’s history is concerned, “It was formed in April 2009 to integrate all the payment mechanisms in India and make them uniform for all retail payments. In March 2009, the RBI reported an annual average of just six non-cash transactions per capita, despite over 10 million retailers accepting card-based payments. A parallel challenge was combating black money and corruption, which were primarily facilitated by cash transactions.”
Also, “RBI released a vision statement in 2012 for a period of four years that indicated commitment towards building a safe, efficient, accessible, inclusive, interoperable, and authorized payment and settlement system in India. It was also part of the Green Initiative to decrease the usage of paper in the domestic payments market.”
Thus, “UPI was officially launched in 2016 for public use. The pilot launch took place on 11 April 2016, inaugurated by Dr. Raghuram G. Rajan (the then RBI Governor) in Mumbai, with 21 member banks participating.”
As per international media reports, “Noting the success of UPI, Google, in December 2019, suggested that the US Federal Reserve Board should follow UPI as an example in developing ‘FedNow’ – a real-time payment system for the United States of America (USA).”
Media reports claim that, “Following UPI’s exponential growth, India became the world’s largest real-time payment market with 25.5 billion annual transactions in 2020 as per data from ACI Worldwide and GlobalData. This put the country ahead of China, South Korea, Thailand and the United Kingdom. As per the Economist Intelligence Unit Report 2021, UPI has made India a leader in the global real-time payment market followed by China and South Korea.”
While ‘UPI 2.0’ was reportedly “launched on August 16, 2018”, the NPCI reportedly “introduced new features under the ‘UPI 3.0’ from 2024”. Thus, the process of improvements and fine-tunings are reportedly on.
Prominent among others, is the ‘UPI Circle’.
As per media reports, “The RBI, in its monetary policy announcement in August 2024, implemented the delegated payments feature through UPI. By doing this, a person (the primary user) could grant permission to another person (the secondary user) to utilize their bank account to perform UPI transactions. The primary user would choose the transaction limit. Hence, the UPI Circle feature was launched on 19 August 2024.”
Reportedly, “Two kinds of delegation are possible with UPI Circle. Full delegation, in which the primary user gives the secondary user the authority to start and finish transactions up to specified expenditure limitations without needing additional permission.”
Additionally, “there is partial delegation, in which the primary user must authenticate and complete the payment using their UPI PIN before the secondary user may start a transaction.”
“With UPI Circle, one can use platforms for collaboration or gig economies to create micro-communities where people can pool resources or settle payments in real time.”
“On August 22, 2024, PhonePe released the feature on its platform. At the Global Fintech Fest 2024, Google Pay announced that it will be introducing the UPI Circle feature.”
It has also been reported that, “NPCI announced on July 22, 2024 the launch of the ‘UPI One World’ wallet for all international visitors to India. After a thorough KYC check based on a passport and valid visa, the service is available through approved Prepaid Payment Instrument (PPI) issuers at airports, hotels, specified money exchange sites, and other touchpoints. As per foreign exchange restrictions, any unused balance can be returned to the original payment source. Under the direction of the Reserve Bank of India (RBI), NPCI, IDFC First Bank, and Transcorp International Limited have collaborated to make it possible.”
