Soon, You May Have Tap-and-Go Offline Payment Feature For UPI

Unified Payments Interface (UPI) managing body National Payments Corporation of India (NPCI) is looking to add near-field communication (NFC) capabilities to its payments infrastructure to take on its rivals Visa, Mastercard and another NPCI-owned service Rupay.

Visa, Mastercard and Rupay offer contactless tap-and-go payments at point-of-sale, using the NFC feature. The tap-and-go contactless payment is not only easy and convenient to use but has gained further impetus due to the pandemic.

The introduction of NFC payment system will allow NPCI to expand UPI’s reach to offline merchants by tapping the PoS ecosystem. Further, it will trigger more peer-to-merchant transactions, according to a Mint report citing sources. NPCI is in talks with several payment aggregators to push the product across point-of-sale (PoS) devices.

Once enrolled, a user can simply tap their devices on a PoS system, choose their preferred UPI payment app and add their pin to make payments. Meanwhile, for payment cards, users can make transactions below INR 2K can be made by simply tapping the card on a PoS device. The users need to add their pin for transactions above INR 2K.

To maximise UPI traceability, NPCI also wants to allow partner banks to issue prepaid cards and vouchers on the UPI network to help customers to make payments. This will be an alternative to QR codes and aim to target feature phone users, who had so far been left out of the UPI ecosystem.

“These functionalities are in line to add more use-cases to the UPI infrastructure. With zero merchant discount rate (MDR) now being a pressing issue, NPCI is looking at newer revenue streams for players and partner banks,” a payment analyst told the publication.

UPI is currently the most popular digital payments system, all thanks to its conveniences. The payment system has been growing rapidly and nearned 1.5 Bn transactions mark in July 2020. UPI has recorded 1.49 Bn transactions worth INR 2,90,537 Cr last month, against 1.34 Bn transactions worth INR 2,61,835 Cr in June.

Yet the NPCI is looking to cap transactions for digital payments players like Google Pay, PhonePe, Paytm and others to prevent any negative impact in case the system was to collapse. NPCI has asked apps to limit their payments if they exceed 50% of all UPI transactions in the first year of the implementation of the rules, 40% in the second year and 33% from third year onwards. The body had reportedly taken the decision earlier in July, and will be applicable from April 1, 2021. It has been working on these capping guidelines since last August.