• The Reserve Bank has allowed credit cards to be linked with the Unified Payments Interface (UPI), which will enable more people to make payments using the popular platform.
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.
• UPI has become the most inclusive mode of payment in India with over 26 crore unique users and 5 crore merchants on the platform.
• In May, about 594 crore transactions amounting to Rs 10.4 lakh crore were processed through UPI.
• At present, UPI facilitates transactions by linking savings or current accounts through users’ debit cards.
• The new arrangement is expected to provide more avenues and convenience to the customers in making payments through the UPI platform.
• To start with, RuPay credit cards issued by the RBI-promoted National Payments Corporation of India (NPCI) will be enabled with this facility, and the facility will be made available after system developments.
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.
NPCI, during its journey, has made a significant impact on the retail payment systems in the country.
Some major innovations by NPCI
RuPay: It is an indigenously developed payment system designed to meet the expectation and needs of the Indian consumer, banks and merchant ecosystem. RuPay supports the issuance of debit, credit and prepaid cards by banks in India and thereby supporting the growth of retail electronic payments in India.
Immediate Payment Service (IMPS): For transferring funds real time and 24x7 interbank was a major challenge faced in the banking industry. Only NEFT & RTGS were available to users for fund transfer during banking hours. IMPS provides robust and real time fund transfer which offers an instant, 24x7, interbank electronic fund transfer service that could be accessed on multiple channels.
National Automated Clearing House (NACH): NPCI has implemented NACH for banks, financial institutions, corporates and government a web based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature. NACH system can be used for making bulk transactions towards distribution of subsidies, dividends, interest, salary, pension, etc and also for bulk transactions towards collection of payments pertaining to telephone, electricity, water, loans, investments in mutual funds, insurance premium etc.
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.
Bharat Interface for Money (BHIM) UPI: It is a payment app that lets users make simple, easy and quick transactions using Unified Payments Interface (UPI). Users can make direct bank payments to anyone on UPI using their UPI ID or scanning their QR with the BHIM app. Users can also request money through the app from a UPI ID.
BHIM Aadhaar Pay: It is meant for merchants to receive digital payments from customers over the counter through Aadhaar authentication. It allows for any merchant associated with any acquiring bank on BHIM Aadhaar Pay service, to allow the merchant to accept payment from a customer of any bank, by authenticating the customer’s biometrics – currently only fingerprints, directly from the customer’s Aadhaar enabled bank account and receive the sale proceeds instantaneously directly into merchant’s own bank account.