By Murthy Veeraghanta, Chairman & CEO, VSoft Technologies
Headquartered in Hyderabad, VSoft Technologies caters to the Indian Banking and Financial Institutions Sector with technology products and platform based BPO services in the core banking and payments domain.
After piloting the world’s first real time settlement platform, Immediate Payment System (IMPS), and world’s largest biometric database in the form Aadhar, National Payments Corporation of India is ready to launch another landmark project with the Unified Payments Interface (UPI). UPI, NPCI’s next generation instant payments platform, has the potential to transform the way we handle money and revolutionize the payments industry.
The key to UPI lies in that anyone anywhere can use it. Imagine if you were to walk to a general store to buy a packet of chips; you could leave your wallet at home, open your UPI-based app (like VSoft’s ‘Jeb’, winner of NPCI’s UPI app hackathon), key in your ‘mpin’ (a unique and secure authentication code similar to debit card pin), and send the amount requested to the shopkeeper, all in a matter of seconds. UPI’s integration with user’s bank accounts is unique because the amount transacted is debited directly from the bank account of the sender and credited into the bank account of the receiver instantaneously with a minimal transaction cost.
It’s a true win-win situation for the banks and their customers. Unlike other hyped FINTECH-based wallet offerings, with UPI, banks are stakeholders in the payments and are set to gain the most considering the volume of transactions that are bound to take place on a daily basis, not to mention the ability to use float amounts as the funds are channeled through them. For customers, UPI ensures security and accountability during transactions, with the benefit of continuing to accrue interest on the funds that have stored in their accounts. The inconvenience of trying to reload a traditional ‘closed loop’ mobile wallet with funds is eliminated with UPI-based payments, creating a sustainable, open ended system that allows customers to not have to compromise between choice of bank and universal acceptance of payments. UPI also offers a variety of options for transacting as well, and creating a new recipient for funds is painless. For instance, as demonstrated by ‘Jeb’, you can use the reader in your UPI-based application to scan the QR code displayed on a hawker’s kiosk to initiate the payment to his account. Dynamically-generated virtual addresses can be used to mask your bank account, thereby easing the mind of consumers who are wary of revealing their financial information.
Payments can also be ‘collected’ using UPI-based applications using a ‘pay request’, and, upon acceptance or rejection of the request, the transaction occurs accordingly. The scope of this feature’s usage could even extend from fund collection associated with utility bill payments and ecommerce to recurring salaries, fees, and EMI amounts.
A number of reasons can be seen in hindsight of why UPI is all sent to be a game changing platform to the banking industry. To begin with, the telecom revolution that has enabled the penetration of mobiles even in rural hinterlands can be seen as commendable force to reckon with. In fact the industry recently crossed a milestone of 100 crore subscribers while the awareness and availability of DATA is improving continuously .This has also impacted the banking sector as the volume of mobile transactions in the year 2015 has been about 30 crore while the value of mobile banking transactions was about ₹ 2.9 Lakh Crores according to RBI. All prominent commercial banks have gone a step further by introducing a variety of services through their mobile applications to a suit the needs of consumer.
In an era Instant gratification, changing demographic nature of consumer is also seen as significant factor responsible for banks to increase the service delivery channels. India is the youngest nation with 65 percent population under the age group of 35. The youth have an inclination towards technology oriented solutions as seen in case of widespread acceptance of ecommerce as well as taxi haling applications.
The policy maker and regulator have also been have been instrumental in drafting strategies that include prudent schemes like Jan Dhan Yogna for financial Inclusion, establishment of infrastructure platforms for electronic payments as well as incorporating world‘s largest biometric id system for identifying individuals and providing benefits through Aadhaar seeded bank accounts. The introduction of RUPAY enabled debit cards can also be seen in this context as an initiative to restrict the flow of cash in society.
While cash remains preferred mode of payment for small value transactions as its availability and acceptance at all points of purchase is universal despite the inconvenience of carrying it. The policy maker’s aggressive push to disincentive usage of it in order to contain leakages and make electronic payments acceptable by tapping the existing opportunities like surging bank accounts, mobile phone penetration and embrace of technology solutions by consumer; can be seen as the key forces in the conception of Unified Payments Interface Platform .
As evident in recently concluded Hackathon by NPCI to commemorate the launch of UPI where VSoft’s Jeb had been bestowed with best payment application, it all boils down to simple fact that an application that provides the best experience to user with innovative features and value added services while ensuring utmost security is the need of the hour for all stakeholders involved especially the banking sector for ushering the transformation in our day to day payments.