The National Payments Corporation of India (NPCI) is now looking to leverage the potential of ecommerce marketplaces, Amazon and Flipkart, for next phase of growth of Unified Payments Interface (UPI).
A media report citing people aware of the development said that NPCI is looking at Amazon and Flipkart to enable online payments only after the product is delivered. This can be enabled by using an escrow-like mechanism.
In simple terms, the money will be credited to e-tailers only after the delivery is confirmed by the consumers. At the time of purchase, UPI would create the escrow-like account where the money for the order would be parked. Once the order is confirmed, the payment will be transferred then.
However, this plan may reportedly take six-eight weeks to roll out. The idea is to gain the trust of non-adapting online users who still pay online via debit cards or mobile wallets. The report said that since ecommerce sees a lot of users and if they start using UPI for these payments, it would broaden the overall user base.
If the plan goes through, UPI may also see an increase in the volume and value share of UPI payments to merchants. This is because ecommerce payments are in the range of INR 1,500-2,000 on an average across leading platforms. It is being said that so far, at least 80% of transactions on UPI are for peer-to-peer payments.
UPI was launched by the NPCI in 2016 to allow users to transfer money immediately using a mobile. NPCI is an umbrella organisation setup by Reserve Bank of India (RBI) and Indian Banks Association (IBA) for all retail payments in India.
UPI also allows a peer-to-peer money collect request which can be scheduled and paid as per requirement and convenience. Since its inception, UPI has received strong support from the government.
Notably, the plan comes at the time when UPI has seen a decline in the number of transactions over the last two months.
The fall is being attributed to reduced cashbacks and outages, which led to an increase in transaction failure. The Central government has been taking several steps to digitise the mode of transactions and make India, a cashless society.
And in this, UPI has played a major role. But after a sudden rise in February 2019 and since then a decline in the transactions done via UPI, the attempts to collaborate with ecommerce marketplaces shows the proactive call to continue India’s digitisation.