The payment of sins can be delayed, but it cannot be avoided.
Let us rewind 5 years of our life. We are living in the era of Internet Banking- the supposedly ‘better’ alternative to offline and physical means of banking. But is it? Net banking requires our account number and type, bank name, and IFSC code. Most banks add a new payee after 4-8 hours, which means one will get the money long after he needs it. Not need to mention the efforts you put into all this.
Enter UPI (Unified Payments Interface):
The very intention of introducing UPI was to get rid of all this hassle. In layman’s terms, UPI has an email-id for you. Something which your bank uses to identify you and do money transfers and payments. UPI uses Immediate Payment Service (IMPS) to do this. IMPS is faster than NEFT, as it acts immediately, and also, it’s 24x7x365. Thus, UPI makes it easier to do online payments than a digital wallet or credit or debit card.
Let’s look at the architecture of UPI.
1. You link your UPI wallet with a bank, after which you’ll get a virtual address for the same.
2. You use this virtual address while making a payment via your bank.
3. UPI would use the information it has to map the virtual address of the sending and receiving banks to the actual bank accounts and then initiates a credit and debit transaction.
IMPACT ON OUR COUNTRY :
Due to its perks, UPI is in progress to overtake the other online wallets. Even if the latter outperform the former on a cumulative basis, UPI app is growing faster on a per month basis. In February this year, transactions exceeding Rs.1.01 lakh crore (that’s over $14 billion) were recorded via UPI, far above mobile wallets Rs.14,279 crore.
UPI deserves this credit as it has three significant advantages over the online wallets:
1. Simpler to use: Upasana Taku, co-founder of Mobikwik, said that UPI is definitely simpler in peer-to-peer transactions and hence there is a pick-up in UPI transactions. A wallet transaction involves multiple legs, including transfer of money from bank account to the wallet and then to the beneficiary, which the UPI doesn’t require.
2. No KYC (know your customer): As of now, KYC is not required for UPI as it is linked to your bank account and it’s just like your any other internet banking transaction.Mobikwik said that close to 50% of its 107 million users have already done KYC.
3. Interoperability- You can’t use Paytm to send money to your friend using Google Pay. UPI overcomes this.
This has forced the online wallets make themselves more lucrative, by offering many cash backs. While this has benefited them, it has also increased the activities the bank has to do, as ultimately the bank is where the real money lies. Thus, the introduction of UPI has benefited both the parties, while the people being the most significant gainers.
Above all, UPI would be good for the economy as it would give a way to mass cashless payments. Use of hard cash has come down and the economy has become more transparent.
Digital payments are growing quickly within the country; however they’re still a fraction of the payments.
Most of the transactions involving small amount of money are still in cash. The ease and convenience UPI offers has helped individuals prefer to pay their maids, milkman, newspaper vendor, etc., digitally than in cash.
Today, most of us find bank visits cumbersome. With UPI, we feel the same about visiting an ATM.
There are over 40 million merchants in India, and out of those only about a million use card readers. With UPI, they won’t even need those archaic machines. Not to forget the costs per transaction that comes with the likes of VISA, MasterCard, etc. UPI costs only 50 paisa per transaction. All in all, the impact of UPI has had, and will continue to have on our country, so it’s too hard to neglect it.
LOOKING AHEAD- WHAT UPI CAN BE:
There is one feature in UPI, which is ‘mandates’. Mandates or standing instructions mean that UPI can become the go-to payment option for all recurring payments like SIPs, Mutual Fund payments, monthly subscriptions etc.
Also, not having biometric Aadhaar-based payment feature has made it difficult for those who do not own a smartphone, i.e. about 30% of India’s population finds it difficult to use UPI, or any other digital payment solution. So, bringing these back will only boost UPI. UPI can actually be used by those having featured phones (non-smartphone), but a smartphone is nevertheless required for one time registration.
A GREEN APPROACH TO DO THAT:
Every year we produce more than 2 million tonnes of e-waste, and majority comes from used mobile phones. What we can do is build our own operating system (O.S.) having the features of calling, texting, maybe camera, and most importantly, an UPI app. We will load this on our used phone. While UPI does offer an offline mode approach for featured phones, using the app will be easier. Selling these phones to the poverty ridden sector at a low price will only help in widening the reach of UPI, while also recycling e-waste.
I’ll conclude saying that for UPI to become the leader in digital transactions, it must drive large-scale adoption of digital payments. There needs to be a large merchant-acceptance network; both online and offline, because that is where the real push for ‘Digital India’ will come from.