Last week, RBI governor Shaktikanta Das launched UPI 123Pay, a new service to make Unified Payments Interface (UPI) payments for over 40 crore feature phone users.

The RBI governor also launched a 24x7 helpline for digital payments, which has also been set up by the National Payments Corporation of India (NPCI). The helpline named ‘Digisaathi’ will assist the callers/users with all their queries on digital payments via website and chatbot. 

These initiatives will further deepen the digital ecosystem and financial inclusion. 

What is Unified Payments Interface (UPI)?

It is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing and merchant payments into one hood. It also caters to the “peer to peer” collect request which can be scheduled and paid as per requirement and convenience. It facilitates immediate money transfer through mobile devices round the clock.

The NPCI launched UPI in April 2016.

What is the need for a new UPI service?

• The NPCI, a RBI promoted body which created and operates UPI, had launched a USSD (Unstructured Supplementary Service Data) based service to enable UPI access for feature phone users, within months of the launch of the main platform for smartphone users in 2016.

• At present, efficient access to UPI is available on smartphones. UPI can be accessed through NUUP (National Unified USSD Platform) using the short code of *99#. But this option is cumbersome and not popular. 

• The overall quantum of transactions under UPI is growing very fast and has touched Rs 76 lakh crore in FY22 so far, as against Rs 41 lakh crore in FY21. In February alone, the volumes doubled to Rs 8.26 lakh crore through 453 crore transactions.

• The multifaceted features of the UPI are available mostly on smartphones as of now and people from the lower rung of the society, especially in the rural areas, are not able to access the payments service even as smartphones have become cheaper.

• The launch of UPI 123Pay makes facilities under UPI accessible to that section of society which was so far been excluded from the digital payments landscape. 

How does it work?

UPI 123Pay includes four distinct options as below:

• App-based Functionality: An app would be installed on the feature phone through which several UPI functions, available on smartphones, will also be available on feature phones.

• Missed Call: This will allow feature phone users to access their bank account and perform routine transactions such as receiving, transferring funds, regular purchases, bill payments, etc, by giving a missed call on the number displayed at the merchant outlet. The customer will receive an incoming call to authenticate the transaction by entering UPI PIN.

• Interactive Voice Response (IVR): UPI payment through pre-defined IVR numbers would require users to initiate a secured call from their feature phones to a predetermined number and complete UPI on-boarding formalities to be able to start making financial transactions without internet connection.

• Proximity Sound-based Payments: This uses sound waves to enable contactless, offline, and proximity data communication on any device.

National Payments Corporation of India

• National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India. 

• It was founded in 2008. 

• Considering the utility nature of the objects of NPCI, it has been incorporated as a “Not for Profit” company, with an intention to provide infrastructure to the entire banking system in India for physical as well as electronic payment and settlement systems. 

• The company is focused on bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems.

• Some major innovations by NPCI include RuPay, Immediate Payment Service (IMPS), National Automated Clearing House (NACH), Bharat Interface for Money (BHIM) UPI and BHIM Aadhaar Pay.

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