UPI –Next Wave in Digital Payments

Sonal by Sonal Deo

Published Mon, Feb 13th 2017, 10:09 | Technology


The digital payments industry is expected to hit 500 billion dollars by 2020 and may contribute to 15 percent of India's GDP, says a study conducted jointly by Google and the Boston Consulting Group.

Thanks to the increasing penetration of smartphones across various tier towns & upcountry locations & entry of non- banking institution offering payments & financial inclusion services.

Apart from non-banking institutions, entry of payment/ small bank & initiative of government’s Unified Payment Interface or UPI will change the game of entire payment ecosystem in the country.

Government seriousness & market sentiments (acceptance of digital payment as one of the mode of payments) has been encouraging & I find following opportunity of UPI in our day to day life –

1.      Transfer money to family /friends/vendors /partners

2.      Insurance or utility bill payment

3.      Buy train or flight ticket online or book your travel

4.      School fee collection

What is Unified Payment Interface Upi Payment

Unified Payment Interface intends to offer an system architecture and a set of standard API / system connectors to facilitate, the next generation online immediate payments leveraging trends such as increasing smartphone adoption, increasing penetration of mobile data, Indian language interfaces.

UPI Participant Entities

Remitter Bank / Issuer Bank

Remitter PSP / Issuer PSP

Upi Payment (NPCI)

Beneficiary PSP / Acquiring PSP

Beneficiary Bank / Acquiring Bank

*PSP and Bank can be a single entity or separate entity

Types of Transactions

Push Transaction (Pay Request) – Payer Initiated

Pull Transaction (Collect Request) – Payee Initiated

UPI Transaction Limits

Presently the Transaction Limit for a UPI Transaction has been set at INR 1 Lac per transaction.

Upi Payment Transaction - Beneficiary Identifier

Account Number + IFSC

Mobile Number + MMID

Aadhaar Number

Virtual Address i.e. UserName@psp; (e.g. abcd9819@indusind)

UPI Transaction Authentication

For transactions through PSP

1st Factor – Device Fingerprint

2nd Factor – BIN/Biometrics

For transaction where Remitter PSP & Remitter Bank are one entity

As per existing 2FA process of Remitter Bank

Source: http://tinyurl.com/jmh9vot

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