NPCI Plans New Feature To Let Users Save UPI IDs On Merchant Platforms

The National Payments Corporation of India (NPCI) is reportedly considering a new feature for Unified Payments Interface (UPI) called “UPI Meta,” which would allow customers to save their preferred UPI ID (also known as a UPI handle) directly on ecommerce websites and apps. 

An ET report, citing senior government officials, said that the NPCI is toying with this idea, which is being referred to as UPI Meta. It has not been officially launched or published as a protocol yet, but NPCI officials have already discussed this with industry executives.

With this feature, customers would be able to save their UPI ID or handles on a merchant’s website or app.

The move is aimed at streamlining the payment process and will put UPI payments in line with how online card payments work today. 

Currently, while shopping online, customers have to select the UPI payment option and then choose their preferred UPI app or UPI ID they want to use for the transaction, leading to multiple steps for making payments.

However, before launching this feature, NPCI will need clearance from the Reserve Bank of India (RBI).

As for cards, the RBI allows “tokenisation,” where card details are saved securely so users don’t have to enter them for every transaction.

Another silver lining of this feature could be its potential to ramp up financial inclusion in the country. For the same, RBI in its latest MPC meeting also allowed NPCI to revise transaction caps for person-to-merchant (P2M) payments on UPI. 

The Looming Apprehension

Despite the promising potential of this UPI lock-in feature, it also sparks concerns about benefiting the already dominant UPI players in the country. 

The report further conveys that deliberations around concentration risks have already taken place between NPCI and the UPI players represented by the Payments Council of India.

Notably, this proposed implementation would require explicit consent each time a merchant wishes to process a transaction through a different payment gateway. This will give the “first-mover advantage” to larger apps like PhonePe and Google Pay, who would likely be the first to secure these consents from users.

Not to forget, the UPI ecosystem faces a severe market concentration issue, as above 85% of the market is owned by PhonePe and GooglePe. Moreover, the NPCI’s efforts to diversify the market have also remained mostly futile. 

For instance, in 2020, NPCI issued a circular mandating a 30% market share cap for Third-Party App Providers, but its implementation has been repeatedly delayed.