RBI To Open Up Unified Payment Interface For Digital Wallets

In a bid to promote the ‘Digital India’ notion, the RBI has now decided to open up Unified Payment Interface (UPI) for digital wallets such as Paytm and Mobikwik. Until now, the app has been functional for banks only and digital banks can access it via the partner banks.

When implemented, this will allow users to directly send/receive money via digital wallets like Paytm, Freecharge without routing through the bank. However, the banks would still play a major role as players will also need to hold on to their partnerships for escrow management, settlement, and reconciliation, grievance redressal, etc.

The RBI will soon issue guidelines, fee structure and know your customer (KYC) norms for the same.

As stated by a source in an ET report: “The opening up of the UPI framework and, in turn, the permission to allow interoperability between wallets is something the RBI is looking into very seriously and should be able to activate in 2-3 months.”

In February 2017, UPI network reportedly logged in 4.2 Mn transactions worth $290 Mn (INR 1900 Cr), which is although much less than 261.67 Mn transactions logged in digital wallets, worth $1.27 Bn (INR 8,350 Cr) in January 2017.

RBI Governor Raghuram Rajan unveiled the UPI in August 2016. This app has been launched by the RBI in conjunction with the National Payments Corporation of India (NPCI). With the new interface, users can make transactions as low as INR 50, leading up to INR 1 Lakh for a base transaction fee.

UPI is basically a one-touch transaction for transferring money between any two parties (merchants, friends, delivery boys among others) using a ‘unique virtual address’ on a smartphone. Once a beneficiary is added to the address, an MPIN ensures transaction within seconds.

“What it does is turn phones into bank branches,” said Rajeev Suri, Head of Marketing at Innofest, in an earlier statement. “Like Aadhar, UPI is basically the API-isation of payments and other transactions. Where once it is integrated, it can be used to build on and over existing applications for both marketplace sellers as well as banks,” he added.

Later, several startups launched their mobile apps based on UPI such as Trupay, Razorpay and Flipkart owned wallet PhonePay. The latter has recently been in spat with ICICI bank as the ICICI customers were not been able to  facilitate payments via PhonePay. In October 2016, MobiKwik partnered with ICICI to facilitate payments via UPI. Recently, in February 2017, to facilitate digital transactions among consumers, the National Payments Corporation of India (NPCI), in association with Visa and Mastercard, launched BharatQR code- a quick response (QR) code. The BharatQR code is mandated by the government to enable digital payments without card swiping machines.

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