Even as the UPI showed a stellar growth of 30% in June, reaching 246.37 Mn transactions, the NPCI (National Payments Corporation of India) is now trying to make these figures more real by blocking same account transactions.
In a circular issued to banks, NPCI said that transactions in which the payer and payee accounts are the same will be blocked from August 1.
“While analysing the transaction patterns, we have observed instances wherein both the credit and debit accounts are the same… customers are sending money from their account to the same account… these transactions do not serve any use case and also add unnecessary load on the system,” read the circular.
Further, the NPCI said that all such transactions would be blocked in the UPI central system and has also asked payment service providers and banks to block such transactions at their end.
To explain how these transactions take place, the NPCI said that transactions are being done between the same UPI accounts or, in some cases, from the ID to the account number, but the underlying account is the same. There is a third way in which users carry out such transactions — by sending money to another ID that is connected to the same bank account.
Related Article: UPI Continues Massive 30% Growth In September: NPCI
Such transactions have been largely attributed to the attractive cashbacks being offered by multiple non-banking private entities. To discourage users from conducting multiple, unnecessary transactions for cashbacks, the NPCI wants to stop transactions that don’t serve any known use case.
This comes at a time when the NPCI is expected to launch an upgraded version UPI 2.0.
Inc42 had earlier reported that the NPCI showcased a presentation of 2.0 to some top bank officials on July 3 and is expected to launch it on July 13. With UPI 2.0 rollout, banks and fintech companies will have to update their existing systems to incorporate the changes in line with the new version.
UPI 2.0 will have additional features such as generation of collect payment requests along with invoice/ bill attachment, a one-time mandate with block functionality, signed intent/quick response code, addition of overdraft account type in UPI, and foreign inward remittance.
The NPCI also planned to enable UPI-based payments for inward international transactions.
Credit Suisse predicted that India’s digital payments industry, which is currently worth around $200 Bn, is expected to grow five-fold to reach $1 Tn by 2023.
The continuous growth in digital payments in India has been largely attributed to the UPI. But, with the NPCI combating fake transactions, the real UPI growth figures will tell the true story after August.
[The development was reported by ET.]