case study on upi

Digital Payment Service in India - A Case Study of Unified Payment Interface

Mahesh A., & Ganesh Bhat. (2021). Digital Payment Service in India - A Case Study of Unified Payment Interface. International Journal of Case Studies in Business, IT and Education (IJCSBE), 5(1), 256–265. https://doi.org/10.47992/IJCSBE.2581.6942.0114

10 Pages Posted: 15 Jul 2021

College of Management and Commerce

Date Written: July 13, 2021

Purpose: The Indian Banking sector is striving hard to popularise digital payments and has gained momentum after demonetization and digital India initiatives. To facilitate digital payments, “National Payment Corporation of India (NPCI)” launched the “Unified Payment Interface (UPI)”, which is an amazing, revamped, and cost-effective breakthrough for enabling digital payment services for all. Proliferation of smartphones, technological innovations, and effective internet communications has signified the usage of mobile payment facility for smartphone users, financial institutions and particularly the banks. To achieve paperless and cashless economy, Unified Payment Interface (UPI) is a potentially innovative way of transferring funds using a virtual payment address established by the National Payment Corporation of India (NPCI). Hence, it is needed to be assessed for its potential to contribute towards achievement of digital economy. Design/Methodology/Approach: This paper is focused on understanding Unified Payment System’s (UPI) growth and its progression in retail digital payment over the years. The study was carried out by exploring secondary data sources and by applying Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis format. Finding/Result: UPI has shown remarkable growth in last couple of years due to customer’s shift towards contactless payments over other methods. Study revealed that the growth of digital payments has increased significantly, especially in the retail payment sector on the UPI platform. Originality value: This study examines UPI's position in the digital payment ecosystem, with an emphasis on identifying UPI's core strengths and growth prospects, as well as areas for future research to investigate India's complete e-payment ecosystem. Paper type: A research case study on Digital Payment Service in India - A Case Study of Unified Payment Interface

Keywords: Digital Payment, Retail Payment, UPI, Digital Transactions, NPCI

Suggested Citation: Suggested Citation

Mahesh A (Contact Author)

College of management and commerce ( email ).

City Campus, Pandeshwar Mangaluru, Karnataka, ID Urban 575001 India

Do you have a job opening that you would like to promote on SSRN?

Paper statistics, related ejournals, emerging markets: finance ejournal.

Subscribe to this fee journal for more curated articles on this topic

• Fortune 500 India
• 40 Under 40
• Most Powerful Women
• Budget 2024
• India's Richest
• The Next 500
• Best B-Schools
• All Rankings
• Fortune India Exchange
• Infographics
• Buy on Amazon
• Annual Subscription

How UPI is making India’s digital economy boom

The instant real-time payment system reports a threefold jump in volume and value over the last fiscal as customers opt for its convenience amid the pandemic..

In the pandemic when social distancing is the most critical norm, the Unified Payments Interface (UPI) is like a godsend. The instant real-time payment system has turned out to be the best financial innovation post-Independence in India and has begun in earnest the process of replacing the cash economy altogether. It has contributed its might to make the country one of the fastest growing digital economies in the world.

According to the latest data compiled by the National Payments Corporation of India (NPCI), which manages UPI, it has reported a threefold increase during the last fiscal (2020-21) in both the number of transactions and the value. As of March 2021, the total volume has jumped to 2,732 million transactions, worth ₹5,04,886 crore. At the beginning of the fiscal, in April 2020, the total volume stood at 999.6 million with the total value of transactions at ₹1,51,141 crore.

The number of banks that are live on UPI has gone up to 216 from 153 in April 2020. When the platform began operations in April 2016, there were only 21 banks on board.

The two leading players—Walmart-owned PhonePe and Google Pay—have continued to dominate the UPI ecosystem. PhonePe has topped the chart with 43.9% of the total UPI transactions volume, accounting for 1,199.51 million transactions, with a value worth ₹2,31,412 crore. In contrast, Google Pay has mopped up a 35% market share in March, with 957.01 million transactions worth ₹2,01,185 crore. The third largest player, Paytm Payments Bank, posted 401.16 million transactions worth ₹43,221 crore.

A year ago, Google Pay was the top player, handling 440 million transactions with a value of ₹1,51,141 crore. PhonePe was the second largest with 374 million transactions carrying a total value of ₹66,554 crore. Paytm stood at third position with 128 million transactions with a value of ₹12,717 crore.

The government’s decision to abolish merchant discount rate (MDR) in December 2019 and bring the transaction fee to zero had worked in UPI’s favour immediately. Banks and payments companies were told not to levy any charge for UPI transactions. However, in July 2020, a committee set up by the Reserve Bank of India (RBI) said the move has impacted the survival of payment gateway entities and hampered innovation efforts, resulting in job losses and a slowdown in the expansion of the digital payments infrastructure in the country. While the industry is keenly awaiting a positive response, neither the central bank nor the finance ministry has taken a call on reintroducing MDR yet.

Industry officials point out that MDR acts as a financial incentive for banks and payment aggregators to acquire merchants. It supports the entire chain of stakeholders in the digital payments ecosystem. Many believe that the zero MDR policy will actually harm the digital payments industry more than promoting adoption of digital transactions.

Subsequently, in March 2020, some banks informed their customers that starting from April 1, peer-to-peer (P2P) transactions will no longer be free, barring the first 20 transactions in a month. They said their customers transacting ₹1,000 and below will be liable to pay ₹2.5 (plus 18% GST) per transaction, whilst customers who make a P2P transaction of over ₹1,000 will be liable to pay ₹5 (plus 18% tax). However, the Central Board of Direct Taxes (CBDT) issued a circular in August, 2020, directing all banks to stop applying any charge on UPI payments and refund the charges if they have collected any.

The last fiscal data captures the explosion in mobile-based instant inter-bank transactions facilitated by UPI. Across the country, merchants, service providers, small companies, and traders have already made UPI a part of their daily life. The instant transfer of funds between two bank accounts on a mobile platform, and the fact that it is regulated by the RBI, have made it a darling of the payments ecosystem.

“As the name suggested, UPI was considered to be a unifying force. When we started it, our target was to get an active customer base of 500 million. It is nearly 200 million as of now,” A.P. Hota, former managing director and CEO of NPCI, tells Fortune India .

Bharat Interface for Money (BHIM), an Indian mobile payments app based on UPI and developed by the NPCI, has seen a growth in transactions too. The app, which reported around 14 million transactions (at a value of ₹4,504 crore) in April 2020, has reported 24.4 million (₹7,653 crore) in March 2021. Another app, Cred, has also reported a substantial fivefold growth from 0.94 million transactions (672 crore) to 4.96 million (₹5,390 crore) in March 2021.

Indian banks, especially smaller banks, have also reported a jump in their number of transactions, though the base continues to be small. Axis Bank and YES Bank have reported the fastest growth to 72.9 million transactions (2 million a year ago) and 29.1 million (1.9 million a year ago), respectively. Large-sized banks have, however, reported a slower growth. ICICI Bank, which reported 10.6 million transactions in April 2020, has shown 13.95 million in March 2021. India’s largest commercial bank, State Bank of India, reported 4.6 million transactions vis-à-vis 2.7 million reported a year ago.

“Since all transactions are routed through banks, as a remitter or a beneficiary, their share of revenues is well taken care of. So, it doesn’t matter if their app attracts more customers or not. Of course, there is no MDR now. In the absence of revenues, banks and service providers are losing money because of their investment in IT backbone and tech support. Hopefully, MDR will return soon,” says a banker.

As the top players such as PhonePe and Google Pay cornered a substantial pie of the market, NPCI, in November 2020, placed a 30% cap on the number of UPI transactions for all third-party payment apps (TPAPs). The move was aimed at ensuring that a few players don’t monopolise the digital payments landscape, leading to an overload and a potential collapse.

“The idea is not to create a situation where third-party service levels do not create any disturbance. At present, two players are above the 30% level, while the third player’s share is coming down,” says Hota.

As the name suggested, UPI was considered to be a unifying force. When we started it, our target was to get an active customer base of 500 million. It is nearly 200 million as of now.

According to the notification, the existing players will get two years to comply with the new norms, in a phased manner, till December 2022. The new entrants in the digital payments landscape, including WhatsApp Pay, have had to adhere to the 30% cap from January 2021.

The RBI has, meanwhile, decided to expand the market by allowing NPCI-like private companies with an aim to bring in enhanced competition. The central bank hopes to spruce up the growing digital payments in the country by inviting top corporates, private banks, and fintech firms. It is of the view that the new umbrella entities (NUEs) will help the central bank to achieve its stated objective of de-risking India’s retail payments ecosystem where NPCI currently holds a dominant position.

At a time when the country witnesses explosive growth, it can’t depend on just one payment ecosystem. According to a study by the Ministry of Electronics and Information Technology, India’s digital economy was valued at $200 billion in 2018, accounting for 8% of GDP. It is slated to grow to 18%-23% of the national GDP by 2025.

As the deadline for the bids expired on March 31, 2021, nearly a dozen companies/ joint ventures—led by the Tata group, Reliance Industries, ICICI Bank, Paytm, and several other banks—have approached the RBI seeking the new licence. Just like NPCI, which enables digital payments and settlement systems in the country via UPI and other payment modes, the proposed umbrella entity / entities will create a rival mechanism which will then be used by banks and fintech companies for retail transactions. Once licensed by the RBI, the new entities can own and operate a private payments network like UPI holding similar powers enjoyed by the NPCI.

The payments landscape is set for another explosive growth, for sure.

Follow us on Facebook , X , YouTube , Instagram  and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon .

Leave a Comment

Your email address will not be published. Required field are marked*

More Stories

How We Did It

The list is a ranking of the wealth of entrepreneurs of listed and unlisted companies.

What Ails Small Car Sales?

Stagnant middle-class incomes and price hikes due to stricter regulations and inflation have hit the segment hard.

Richest Indians

The Fortune India-Waterfield Advisors study ranks a record 185 dollar billionaires in the country with a cumulative net worth of ₹99.86 lakh crore.

New Avenues, New Hopes In Start-up Funding

India’s start-ups are recovering from post-2021 funding shock. Will the trend continue?

Realty Czars Cash In On Demand Boom

Real estate sector creates unprecedented wealth for promoters as companies chase next phase of expansion.

NRI Billionaires

[email protected]

+1 617 454 4121

India: Case Study on the Power of Fintech Innovation

The Indian payments landscape completely transformed over the last decade, catalyzed by a shift from cash, cards, and other traditional payment methods to real-time A2A payments, powered by the UPI network and mobile apps. This globally-relevant case study on fintech innovation and disruption was fueled by a crescendo of forces including government policies, banking infrastructure upgrades, and the influence of mobile phone technologies. Figure 1 shows the rapid ascent of UPI-powered mobile payments while usage of cash, cards, and prepaid wallets diminished in share of wallet. Within this article, we tell the story of the rapid transformation of payments in India, and what the future might hold.

Mobile Payments Disruption

Prior to UPI, Indian fintechs were already driving the market towards mobile payments, a push that started with the introduction of digital wallets powered by prepaid accounts such as the Paytm Wallet in 2014. These mobile wallets were propelled by India’s demonetization policy, a large scale macro-economic exercise implemented by the government to combat corruption and push for digital payments. In November 2016, the government of India discontinued the acceptance of all existing currency notes overnight (larger than Rs. 500), with the motive of replacing them by printing new notes. The policy led to a shortage of cash in the country forcing consumers to find digital alternatives. This created the perfect opportunity for fintechs such as Paytm to fill this gap by offering digital propositions designed for both consumer and merchant. Digital wallet adoption rate skyrocketed as consumers became more comfortable with mobile payments.

UPI Payments Explained

The introduction of UPI turbo-charged the pace of innovation and disruption in India. Unified Payments Interface or UPI, launched by the National Payments Corporation of India (established by the Reserve Bank of India) in 2016, is an account-to-account payment system that enables consumers and merchants to send and receive payments with real-time settlement. Currently UPI accounts for about two in every three retail non-cash transactions in India.

UPI is not an end-user product (not a mobile app), but a payment network, used by fintechs and banks who develop and distribute the mobile apps that power payments through the UPI network. Users can easily enable this payment method by creating a unique UPI identification key that is linked with the user’s bank account and mobile number. Many mobile payment apps such as PhonePe, GooglePay, and Paytm (among others) support UPI sign-up, initiation or receipt of payments to and from users’ bank accounts. For P2P transactions, users can simply use the mobile number linked with a UPI ID to transfer money instantly making the user experience extremely quick and frictionless.

Figure 3 illustrates the primary use cases for C2B (merchant) payments, which are enabled by QR codes. There are two types of QR codes used with UPI: Dynamic QR and Static QR. Larger merchants that have integrated payments at their point-of-sale, will utilize the dynamic QR code, which is generated upon billing and presents the customer with the exact amount to be paid. As software embedded payments are still relatively nascent in India, and limited to larger enterprises, static QR codes provide a simpler way for small merchants to receive payments without having an integrated POS system. The static QR only contains the UPI ID of the merchant and customer needs to manually input the amount to be paid. The key success factor for achieving a frictionless experience is that UPI transactions are real-time, allowing both consumers and merchants to receive instant notification of payment completion.

Government Incentive and The Real Cost of UPI

UPI’s rapid growth as a preferred means of C2B payments is fueled in part by a government policy for zero-cost UPI payments, which today, are free for both consumers and merchants (a policy introduced on 1 Jan 2020). The government does subsidize market participants, but this subsidy is small in comparison to the actual costs of the ecosystem (subsidies of c.$295 million in 2022 to merchant acceptance participants falls vastly short of the estimated total costs that are in excess of $1 billion). In the recently announced Budget for FY 2023-2024, the government reduced the subsidy amount to less than $200 million. According to ecosystem cost estimates from the Reserve Bank of India (RBI), on average, a C2B UPI transaction generates a total cost of approximately 0.25% considering the roles of the different stakeholders in the value chain. We break-down RBI’s cost estimates in Figure 4.

Due to India’s current zero-merchant-discount-rate policy, UPI C2B payments are unusually unprofitable for fintechs and banks. PSPs and app providers such as PhonePe, GooglePay, and Paytm (shares shown in Figure 5) are forced to find other sources of revenue such as bill payments and most notably, various forms of embedded credit to consumers and merchants. The lack of payments profitability is one reason why fintechs such as Paytm still struggle to achieve profitability. Paytm reported a -30.5% EBITDA margin for FY 2022, despite its scale and relatively long tenure in the market. The company did however, report a positive EBIDTA margin of c. 1.5% for the first time in Q3 FY 2023, which is attributed largely to expense reductions.

Some Indian market participants expect the ‘zero-cost’ policy to fade, resulting in more natural economic incentives for parties involved in C2B UPI transactions. Merchants continue to lobby in favor of the current policy, which seems to be working as the Indian Ministry of Finance announced last year that UPI is a digital good and the government has no intension of changing the current zero-cost policy. For now, there remains a tension between the massive fintech potential of UPI and the lack of payments profitability for UPI service providers.

Growth of Mobile Payments and Future Implications

India is now the global market leader for real-time A2A payments, but certainly not the only country which has seen a massive uptake in digital payments, as shown in Figure 6. This trend is replicated in other markets such as Brazil and Thailand, where A2A banking infrastructure combined with mobile means of payment are powering disruption. We do not see the same pace of A2A + mobile disruption in more mature western markets. This is a classic example of the ‘leapfrog effect’ in payments where less-developed markets evidence far more rapid innovation and disruption versus mature markets, where behaviors linked to cards are more deeply entrenched (formed over decades).

Countries around the world are drawn to the India (UPI) case study as they aspire for efficient, digital payments and alongside financial inclusion. The National Payments Corporation of India (NPCI) is working to internationalize UPI, recently signing a memorandum of understanding with 13 countries including Singapore, Thailand, France, Netherlands and the U.K. to enable acceptance of UPI outside the countries. NPCI is working with payment providers such as Worldline in Europe to implement Indian payment methods including RuPay and UPI in countries including Netherlands, Belgium and Switzerland. Through this partnership, Worldline’s merchants in Europe will be able to accept UPI payments at the point-of-sale using QR codes.

The Reserve Bank of India also recently announced an agreement with the Monetary Authority of Singapore allowing interoperability between UPI and PayNow (Popular alternative payment method in Singapore). This allows users of both instant payment systems to use the other seamlessly without additional sign-ups and send money cross-border. This alliance is a unique global case study on interoperability of A2A schemes, and one which we expect to be replicated in other markets.

India is a perfect example of the power of fintech to transform an economy and the day-to-day lives of people. In less than a decade, India went from a wide-spread lack of financial inclusion to a country that is now leading the world in A2A-powered mobile payments. This success is the result of government policy working hand-in-hand with banking and fintech innovation. Going forward, however, the fintech community must tackle challenges posed by zero-cost payments, as while Indian consumers and merchants benefit from payments innovation, shareholders are still searching for return on investment.

Please do not hesitate to contact Joel Van Arsdale at [email protected] with comments or questions.

Sameer Verma

Joel Van Arsdale

Topics & themes, related articles, mastering mobility & fuel payment acceptance, banks can still make a comeback in merchant payment acceptance, growth opportunities in b2b mobility & fuel payments, embedded payouts are booming, subscribe to our expert analysis and insights on payments and fintech.

© 2023 Flagship Advisory Partners LLC. These materials may be freely copied and distributed so long as the user attributes the source as Flagship Advisory Partners and references our website: www.flagshipadvisorypartners.com

World of World Heritage Sites: Framework, Digital Transformation, Policy Recommendations

Superapps: Breaking down barriers, building bridges

Mapping the FinTech innovation landscape in India

VIKSIT: An approach for India to achieve USD 1 trillion exports

Ensuring safe and sustainable mobility in India

Global capability centres 2.0 – the new ESG trailblazers

The three T’s of tax – technology, transparency and trust

Unlocking the blueprint for a successful export corridor

Chairperson’s Awards: Our Changemakers

Building a better future of work

Loading Results

No Match Found

Unified Payments Interface (UPI) - The way forward

Dear readers,

I am pleased to bring you the latest edition of our newsletter. In this edition, we focus on the key trends in UPI – credit and cross-border use cases, imperatives for the stakeholders, and the pricing structure of UPI and the possible way forward.

I hope you find this newsletter to be a useful and insightful read.

For further details or feedback, please write to:  Vivek Belgavi  or  Mihir Gandhi

Introduction

UPI has evolved as a game-changer in India’s digital payments ecosystem by providing real-time instant interbank transfers with a faster, more convenient and cost-effective way of making transactions.

Since its launch in 2016, UPI has a gained massive acceptance due to the following features

• instant transactions and credit to beneficiaries in real time
• seamless integration of multiple use cases
• using application programming interfaces (APIs)
• convenience in making payments due to interoperability
• secured mode of payments
• no additional costs to customerscollaborative management model engaging all participants in the industry
• adaptive framework for mobile network operators (MNOs) and FinTechs.

Source: RBI and PwC analysis

With active involvement of the regulators, introduction of new features, and international expansion, UPI is poised to experience the next wave of exponential growth.

UPI grew from 18 million transactions and INR 69.61 billion in FY16–17 to 83,751 million transactions amounting to INR 139,204 billion in FY 22–23, 1  contributing to a compound annual growth rate (CAGR) of 234% in transactions and 196% in value. The following graph depicts the growth of UPI transactions (volume and value) since its inception and provides a projection for the coming years

Key trends in UPI

Some key trends in UPI have been highlighted below

• Linkage of credit cards on UPI
• International transactions enabled through UPI
• Credit lines on UPI

In 2022, 2 the Reserve Bank of India (RBI) announced the linkage of RuPay credit cards on UPI with the objective of providing a seamless and digitally enabled credit card lifecycle experience to RuPay cardholders. Customerscan link their UPI ID on either Bharat Interface for Money (BHIM) or other UPI apps with the help of the registered mobile number which is linked to their credit card account.

Impact on ecosystem players

The linkage of RuPay credit cards on UPI is expected to impact a number of ecosystem players.

Some of the key offerings by non-banks in embedded finance include

Payment networks

Upi app providers, payment gateway (pg) aggregators.

• Making low-value transactions using credit limit : Customers can utilise their credit cards through UPI for low-value transactions rather than making payments through their savings accounts.
• Availing credit limit facility on low-ticket transactions : The credit card on UPI facility will allow users to make low-ticket transactions. This will enable RuPay cardholders to avail the credit limit period of 45–60 days, even on these low-value transactions.
• Incentives for customers on low-ticket transactions : RuPay cardholders can accumulate reward points and earn cashbacks on low-value transactions, resulting in better customer experience and engagement.

Presently, UPI transactions on credit cards are only allowed on RuPay cards.

UPI, being an efficient mode of payment, is expected to increase the adoption of RuPay credit cards, which is currently quite low.

In order to make credit cards on UPI a success, the National Payments Corporation of India (NPCI) will have to jointly work with the regulator on various areas as highlighted below

• Provide incentives to the issuers and acquirers for transactions done via UPI on credit cards to increase the volume and value of transactions
• Around 65% 3 of the Indian population residing in rural areas contributes to nearly 25% of the gross domestic product (GDP) and accounts for 40% 4 of the transactions. The NPCI and regulators could collaborate with various stakeholders and chalk out a business strategy to tap into the rural market to facilitate the use of credit cards and then focus on increasing the transactions with credit cards on UPI

By adopting the strategies mentioned, it can be assumed that nearly 30–40% of UPI person-to-merchant (P2M) transactions from RuPay credit card customers will move to credit cards on UPI over the next two to three years. 5 As per our analysis, the volume and value of RuPay credit card transactions would increase up to 150% and 30% respectively. 6

Presently, the impact of credit card on UPI transactions will be limited to RuPay credit card issuers.

Issuers will face challenges in terms of enhancing their existing technology/systems to accommodate the changes required for enabling credit cards on UPI.

.Some areas that will require changes are mentioned below.

• linking of new or existing UPI virtual payment address (VPAs) to the credit card account along with mobile-device binding supporting the credit card lifecycle functionalities for UPI-based transactions, including payments’ authentication using the UPI PIN instead of the credit card PIN.
• ensuring disputes related to credit card on UPI are resolved using the Unified Dispute and Issue Resolution (UDIR) system.
• ensuring transactions related to peer to peer (P2P), peer-to-peer-merchant (P2PM) and ard-to-card payments are not permitted by restricting the transactions and making changes in the UPI system.
• maintaining the transaction limit defined by the NPCI – issuers will have to update their UPI systems by adding a flag to set a limit of INR 1 lakh for P2M and INR 2 lakhs for specific merchant category codes (MCCs) 7
• ensuring refund and reversal support for credit card on UPI-based transactions such changes will result in an enhanced transaction volume and value which will support the issuers to increase the interchange revenue on UPI payments using credit cards.

Similar to issuers, acquirers will be also impacted in the following ways

• possibility of contractual changes with the merchants because of the recent merchant discount rate (MDR) regulation imposed by the regulator.
• difficulty in enabling credit card on UPI transactions for merchants in their systems.
• need to inform and educate merchants about credit card acceptance via UPI, as well as the associated cost of MDR and interchange.

Merchants will be impacted by the newly introduced MDR on UPI. The same would be applicable on credit card on UPI. Some other required changes are mentioned below.

• Modification in the existing contract would be required with the acquirer for accepting credit card on UPI transactions.
• Smaller merchants need to be categorised based on the policy defined by the RBI 8 because such merchants – with ticket sizes less than INR 2,000 – will not be impacted much by the proposed interchange.

UPI app providers will be least impacted due to RuPay credit cards being available for UPI transactions as the only change required on the apps would be the customer registration process. The transactional flow will remain unchanged.

PG aggregators will incur costs for accommodating the required changes in the system, some of which have been mentioned below

• modifying existing tech platforms to enable credit payments on UPI.
• making contractual changes between merchants and PG aggregators to incorporate the required changes.

Business model

The NPCI International Payments Limited (NIPL) has facilitated internationalisation of India’s UPI system to newer markets. Such UPI initiatives have been discussed below.

UPI for cross-border transactions

Upi for foreign inbound travellers to india.

From 30 April 2023 onwards, NRIs residing in Australia, Canada, Hong Kong, Singapore, Oman, Qatar, the US, the UAE, and the UK would be able to use UPI from their non-Indian mobile numbers for making payments. NRIs would be able do so by first linking their mobile number with a non-resident external/non-resident ordinary (NRE/NRO) account.

Benefits for end customers

• Faster service – i.e. immediate transactions – as compared to the current end-to-end transaction processing time of two to five business days through banks and money transfer agencies.
• Simpler process as compared to the involvement of Society for Worldwide Interbank Financial Telecommunication (SWIFT) and accounting settlements.
• Lower transaction charges as compared to SWIFT transactions for users – for example, sending USD 100 will cost close to USD 6 as transaction charges. 9

Facilitating UPI on cross-border transactions will be convenient for the working population and students residing abroad. Additionally, the micro, small and medium enterprise (MSME) sector will get a boost as trade volumes could increase due to easier and faster payments using UPI.

Bilateral linkage of UPI and PayNow

India’s UPI and Singapore’s PayNow have been integrated to enable faster remittances between the two countries. Singapore has now become the first country with which cross-border P2P payments have been launched.

Singapore is considered as the financial hub of the world. Therefore, linkage to its real-time rail PayNow will prove to be instrumental in reaching global markets. Furthermore, it will improve ease of doing trade and business for MSMEs.

The guidelines for different payments systems and regulators vary across different countries. Cross-border payments would require a stricter adherence to guidelines such as anti-money laundering (AML) and financial action task force (FATF). To do this, issuers will have to make changes to their technology systems to ensure compliance and perform risk evaluation and reporting.

Acceptance of UPI in Nepal

UPI’s entry into Nepal has been a major milestone with it gaining significant acceptance within the country. With this, Nepal becomes the first country to adopt UPI and provide its citizens an opportunity to make and receive realtime payments across P2P as well as P2M segments.

Additionally, if the Nepal model is a success, then the NIPL can enable cross-border remittances between India and Nepal to further bolster the economic ties between the two countries

With this, the Nepal model can be thought of as a case study of UPI for neighbouring countries such as Bhutan and Bangladesh, which have close ties with India and are adopting digital payments systems at a rapid pace.

Benefits for ecosystem players

UPI could become the preferred mode over wire transfers, as such issuers and acquirers would earn the MDR through such transactions.

Partnering with local payment aggregators of countries who have similar payment solutions like UPI can help extend support for UPI as an international remittance channel – which is beneficial for both customers and banks.

On 8 February 2023, the RBI announced a new facility in which foreign tourists travelling to India can now link their prepaid instrument (PPI) wallet to UPI for making local payments in the country.

Presently, UPI for foreign tourists is available only for travellers coming from G20 countries and has been implemented by a few banks and FinTechs. While it is currently available only at selected international airports like Mumbai, New Delhi and Bengaluru, it will soon be implemented across other cities and airports.

Benefits with UPI-linked PPI for foreign tourists

The new initiative of UPI-linked PPI will:

• lead to more money being spent in India.
• benefit local businesses.
• provide convenience to tourists for making payments.

Tourists can use this facility to:

• make hotel reservations and travel bookings.
• pay for public and private transports in the country.
• pay for tickets to historical places and souvenirs.
• dine and shop.
• get health treatments.

Additionally, UPI-linked PPIs will allow tourists to avoid carrying large amounts of cash, thus providing a sense of security.

Opportunity for payments service providers (PSPs) to earn through PPI

The average number of foreign tourists visiting India is approximately 70 lakhs per annum. These tourists tend to spend approximately INR 2.6 lakhs in India. 10

As per PwC analysis, 50% of the above-mentioned spends could move to UPI in the next three to four years.

Therefore, the potential revenue opportunity lies at INR 52–60 crore per annum, at a CAGR of 17%.

This initiative by the RBI will enhance the revenue of PSP app providers as foreign tourists will now be using UPI apps for making payments during their stay in India. Additionally, PSP app providers will get a substantial number of new users, which will eventually increase their revenue through discounts, rewards and cashback earn and burn.

n April 2023, the RBI announced that banks can now offer individuals with pre-approved credit lines using the UPI platform, which will further upgrade India’s most preferred payments solution. This feature on UPI platforms would enable transfer to/from pre-approved credit lines at banks, in addition to facilitating deposit accounts, credit card on UPI and international transactions.

This new move will push lenders to come forward and take advantage of this development by designing innovative products and replicating offerings similar to credit cards. Another benefit is that these credit lines can be offered without an actual physical card, thus reducing the card costs for issuers. Also, point of sale (PoS) and swipe machines will not be needed tofacilitate credit transactions. This will enable customers to make payments for both secured and unsecured lending products like personal loans and working capital loan – subject to the UPI limits. Considering the benefits, this move is expected to revolutionise the way in which customers access credit by providing them with flexibility, convenience and efficiency in using the digital banking ecosystem to manage their money.

In addition to the highlighted advantages, this change will lower the infrastructure costs for credit products on UPI, thus boosting the digital payments system in India. Moreover, it will help banks to create buy now pay later (BNPL) products for UPI customers. As of now, there are no charges mentioned on bank account to bank account-based UPI transactions, as such charges on credit line facility through UPI may be similar to a bank account transaction on UPI.

Pricing and revenue model

• MDR or transaction fees
• Fees and charges

UPI transactions have attracted zero MDR since their inception. However, effective from 1 April 2023, 11 the NPCI has recommended an interchange fee up to 1.1% of the transaction value to be levied on PPI-UPI transactions greater than INR 2,000, which would be fully absorbed by the merchants and paid to the wallet/card issuers with no additional charges to the customers.

UPI is also available with merchants in even the remotest parts of the country. The ticket-size for these merchants is low and their annual turnover is also moderate. Also, the cost of services like last-mile delivery charges and overheads lead to lower margins for such merchants/micro entrepreneurs. Any further charges on UPI will reduce their margins more and disincentivise digital payments over cash. Hence, MDR for small merchants should be waived. 

According to RBI’s discussion paper 12 published in October 2022, the cost ncurred cumulatively by the ecosystem players in a UPI P2M transaction is nearly 0.25%. This means that for an average UPI ticket size of INR 1,000, the cumulative cost incurred is INR 2.5. In February 2023, the total value of UPI transactions was INR 1,235,847 crore, and the cost incurred by the ecosystem players collectively was nearly INR 3,090 crore. Thus, the subsidies provided by the Government to offset this cost are low and do not cover the entire cost. The government should consider further subsidising the overall costs and re-define incentivising schemes that do not exclude small-ticket values. This will help in creating a balance between digital payments growth and incentivising the ecosystem participants.

Around 28 crore 13 transactions are being done on UPI payments on a daily basis. However, when it comes to the details of the fees and charges, ecosystem players like merchants, payments service providers, banks and customers are unclear about the charges and revenue.

To manage these issues, the Government will have to take a few steps to allow pricing to be based on the competition and open market while protecting the interests of smaller merchants and customers to ensure they are not charged.

Moreover, the subsidy provided will have to be re-evaluated based on the measures taken.

This would enhance transparency in the UPI transaction lifecycle and provide a level playing field for all market players.

Overall, the revenue and pricing model for UPI must be based on low-cost payments solutions, benefiting both consumers and businesses, in order to promote digital payments in India.

The way forward

Enabling credit and credit card RuPay payments via UPI is a landmark move by the RBI and NPCI. Overall, this initiative of moving credit on UPI is going to be instrumental and help in further extending the digital payments ecosystem in India. This move will enable the outreach of RuPay credit cards to the next level. Moreover, accepting payments via credit cards will now become easier. Merchants will no longer need to buy any hardware devices to accept credit card payments, which will especially be useful for small merchants across categories who find it difficult to acquire PoS hardware.

Issuers will need to re-design their customer onboarding journey wherein the customer could be given the option of selecting their credit card based on the preference of the network operator, in addition to other attractive features. It will also be interesting to see how the regulator will work towards the inclusion of credit lines, other card payment schemes and mobile apps to expand this feature further.

Although such features will enable ease of digital payments, cardholders will also have to be mindful by using the same in a responsible manner in order to avoid unnecessary accumulation of outstanding dues.

Enabling UPI on international transactions, on the other hand, will have a significant impact on the Indian economy and international businesses, and help expand into a new target segment of NRIs and foreign travellers. Performing cross-border transactions along with a seamless payments’ experience for customers will now become more convenient. For inbound travellers too, this linking of UPI to PPI wallets will be an extremely useful feature and might boost the tourism industry in India.

With UPI going global, FinTech start-ups and payments system operators who are already building innovative use cases in India, will be able to take their services beyond the country and capitalise on new market opportunities.

This growth in the volume of transactions shall also have direct implications on the existing payments infrastructure of PSPs and banks, who will need to ensure that their systems are future-proof and more resilient than ever before. This would require additional investments in terms of system uptimes and processing higher transactions per second (TPS).

The provision of credit lines on UPI will add to the simplification of use of bank credit by customers and drive financial inclusion in urban as well as rural areas. Going forward, a credit line product from a bank will enhance the digital lending ecosystem as well. However, it remains to see how interest rates on such products will be decided.

Overall, credit card on UPI, international transactions for foreign inbound travellers and cross-border transactions on UPI and credit lines on UPI will bring in additional revenue and provide benefits to all ecosystem players. However, the same will have to be implemented with appropriate planning, robust set-ups, and effective alliances to ensure adherence to security and compliance in order to manage transaction volumes successfully.

• Database on Indian Economy
• Operating circular for RuPay Credit Cards linked to UPI
• Rural population (% of total population) - India
• Digital Transactions in India
• PwC analysis
• UPI Limit Standardization
• Average transaction cost of sending remittances from a specific country (%) - India
• India Tourism Statistics 2022 and PwC analysis
• NPCI/UPI/OC No.164/2022-23
• NPCI Statistics for March 2023
• Discussion paper on ‘Charges in payments systems’ published by the RBI (3 October 2022)

Vivek Belgavi

Alliances and Ecosystems Leader, PwC India

Mihir Gandhi

Partner and Leader, Payments Transformation, PwC India

+91 99 3094 4573

Zubin Tafti

Executive Director, Payments Transformation, PwC India

Geetika Raheja

Partner, Payments Transformation, PwC India

© 2018 - 2024 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

• Cookies info
• About Site Provider

Digital Payment Service in India - A Case Study of Unified Payment Interface

Article sidebar, main article content.

Purpose: The Indian Banking sector is striving hard to popularise digital payments and has gained momentum after demonetization and digital India initiatives. To facilitate digital payments, “National Payment Corporation of India (NPCI)” launched the “Unified Payment Interface (UPI)”, which is an amazing, revamped, and cost-effective breakthrough for enabling digital payment services for all. Proliferation of smartphones, technological innovations, and effective internet communications has signified the usage of mobile payment facility for smartphone users, financial institutions and particularly the banks. To achieve paperless and cashless economy, Unified Payment Interface (UPI) is a potentially innovative way of transferring funds using a virtual payment address established by the National Payment Corporation of India (NPCI). Hence, it is needed to be assessed for its potential to contribute towards achievement of digital economy.

Design/Methodology/Approach: This paper is focused on understanding Unified Payment System’s (UPI) growth and its progression in retail digital payment over the years. The study was carried out by exploring secondary data sources and by applying Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis format.

Finding/Result: UPI has shown remarkable growth in last couple of years due to customer’s shift towards contactless payments over other methods. Study revealed that the growth of digital payments has increased significantly, especially in the retail payment sector on the UPI platform.

Originality value: This study examines UPI's position in the digital payment ecosystem, with an emphasis on identifying UPI's core strengths and growth prospects, as well as areas for future research to investigate India's complete e-payment ecosystem.

Paper type: A research case study on Digital Payment Service in India - A Case Study of Unified Payment Interface

Article Details

Most read articles by the same author(s)

• Mahesh A. , Ganesh Bhat S. , India’s Digital Payment Landscape – An Analysis , International Journal of Case Studies in Business, IT and Education (IJCSBE): Vol. 6 No. 1 (2022): Volume 6 Issue 1

The Quest for Achieving Financial Inclusion: M-Pesa Versus UPI

• Government - International
• Government - Innovations
• Infrastructure
• Poverty and Inequality
• Regulatory Policy

Educator Access

A review copy of this case is available free of charge to educators and trainers. Please create an account or sign in to gain access to this material.

Permission to Reprint

Each purchase of this product entitles the buyer to one digital file and use. If you intend to distribute, teach, or share this item, you must purchase permission for each individual who will be given access. Learn more about purchasing permission to reprint .

Abstract: In 2019, World Bank analyst Abebi Eke had a difficult assignment: decide whether to recommend that the World Bank, in line with its commitment to expanding financial inclusion to the world’s poor, lend its support to a particular digital payments scheme. Eke was asked to investigate two of the most promising payment systems—UPI in India and M-Pesa in Kenya—and prepare a memo comparing the benefits and drawbacks of each. Eke had discovered that while successful digital payment systems often shared some aspects of their operating business models, their agent networks and even their marketing campaigns, their regulatory and corporate structures could be quite dissimilar. She also learned that digital payment services had flourished in some countries, both developed and developing, but not in others. Why? The  World Bank’s own research revealed that of the five countries that most successfully implemented mobile money—a form of digital payments—one was a low-income economy, one a lower-middle-income economy, and three were considered upper-middle-income economies, demonstrating there was no one route to achieving financial inclusion. To write her memo, Eke needed to deeply understand the drivers of and barriers to success in digital payments. The case presents students with a rich understanding of both digital payment systems, allowing students to compare and contrast them while assessing each one’s likely success in another country. Learning Objective: Students will learn the complexities of assessing the success factors of a public policy and how or whether a policy can be replicated in a new geopolitical context.

Other Details

Related cases.

Achieving Mental Health Parity

Plans versus Politics: New Orleans after Katrina

Federal Financial Aid for Postsecondary Education

Plans versus Politics: New Orleans after Katrina (Sequel)

Case Studies

Digital Identity

Empowering users via Unified Payment Interface (UPI)

Jun 09, 2023

The problem statement

Cooperative banks in India cater to rural and small-town consumers who mainly rely on cash, making transactions risky and inconvenient.

It necessitates regular bank or ATM trips. Dealing with physical cheques entails printing and shipping costs for banks, as well as consumer fees.

Online transactions are costly, demand the disclosure of sensitive information, and involve a time-consuming process of adding beneficiary account details and two-factor authentication.

Card-based transactions are subject to fraud and financial losses.

Client name and details

Gayatri Bank, established in 2000, is a cooperative urban bank in Jagtial district, Telangana. It has 23 branches and is the 2nd largest cooperative urban bank in Telangana. They deliver economic support and hassle-free digital financial services to the country's underbanked and unbanked population.

The Unified Payments Interface (UPI) is an instant real-time payment system controlled by the Reserve Bank of India through the National Payments Corporation of India (NPCI).

Customers can use a UPI ID (Virtual Payment Address or VPA) and UPI PIN to transfer payments between bank accounts.

UPI offers secure online transfers without the need to share sensitive banking information. UPI has become a user-friendly, contactless payment solution widely adopted by street sellers, small businesses, and retail giants, especially during the pandemic, thanks to the convenience of QR Code integration.

Solution incorporated

Gayatri Bank partnered with BSG's UPI switch for digital payments, boosting inclusion and reducing costs. With our cutting-edge technology, UPI transactions are completed in under 10 milliseconds, ensuring speed and security.

The bank's rural customers benefit from a high daily UPI transaction volume. This cost-effective solution led to a significant reduction in physical footprint, increasing efficiency.

We enabled customers to perform the following transactions using just their UPI ID (VPA) and UPI PIN on internet-enabled smartphones:

• Bill payments
• Everyday transactions
• Balance inquiries
• Mandate registrations for scheduled payment

Gayatri Bank's UPI launch attracted 5,000 remote customers on the first day, resulting in improved income and transaction volumes. They efficiently served more consumers without opening branches or ATMs. The adoption of digital and UPI services increased daily transactions from 20,000 to 100,000.

Highlights/stats

Facilitated quick and secure transactions for day-to-day needs

Delivered 5X improvement in transaction efficiency

Reduced execution time by 1/5th of the usual timing

Financially empowered senior citizens, the masses, and the differently-abled

Increased volumes of Digital transactions by 3 times

Eliminated the need to carry cash, cheques or cards

Abolished the need to remember Passcodes, CVV numbers or enter OTP numbers for all transactions

Enabled secure transactions at remote locations without bank branches or ATMs

Products that might interest you

Ensuring smooth operation of mid-day meal scheme.

Government schools in Telangana, India

Problem Statement

The idea of recording Aadhaar-based attendance of students was not inclined towards keeping an eye on children coming to school but to stake out the actual number of children eating the meals regularly to determine the stock for provisions to be released for the next day as both were performed in synchronous order.

Authentication of subsidized provisions at Welfare Hostels, India.

Welfare Hostels for the aid of Scheduled Castes, Scheduled Tribes, and Backward Classes.

The Government spends a chunk of the budget on each of these students by providing amenities and supplies. However, there were doubts if the headcount stats provided by the hostel wardens were accurate and if the money spent on the ration and other provisions was being utilized judiciously.

Attendance monitoring to enable transparency in Municipal Corporation

The Greater Hyderabad Municipal Corporation (GHMC)

When we were approached by GHMC to verify the authenticity of the attendance and verify the money spent by the corporation in rolling out daily wages for the sweepers across the state, we suggested that GHMC ask the contractors or maistries to produce the list of names and Aadhaar numbers of all the sweepers, they claimed were working daily under their supervision.

Didn't find what you're looking for? Get in touch.

For all press inquiries, please reach out to

[email protected]

M2P Fintech

Fintech is evolving every day. That's why you need our newsletter! Get the latest fintech news, views, insights, directly to your inbox every fortnight for FREE!

Response text

Yay! You're part of our FinFam!

• Prepaid Cards
• Cross-Border Payments
• Pay Later +
• Fleet Drive
• Merchant Acquiring Solutions
• Credit Cards
• Loan Origination System (Finflux)
• Loan Management System (Finflux)
• Debt Collections
• Credit Line on UPI
• Turing (Core Banking)
• Debit Cards

Value Added Services

• KYC Suite (Syntizen)
• Know our founders
• Workplace Safety
• Our community
• Moonlight with us
• Better half
• Case studies
• White papers
• Brand assets
• © 2023 M2P Fintech
• Privacy policy

Report vulnerabilities of   [email protected]

IEEE Account

• Change Username/Password
• Update Address

Purchase Details

• Payment Options
• Order History
• View Purchased Documents

Profile Information

• Communications Preferences
• Profession and Education
• Technical Interests
• US & Canada: +1 800 678 4333
• Worldwide: +1 732 981 0060
• Contact & Support
• About IEEE Xplore
• Accessibility
• Terms of Use
• Nondiscrimination Policy
• Privacy & Opting Out of Cookies

A not-for-profit organization, IEEE is the world's largest technical professional organization dedicated to advancing technology for the benefit of humanity. © Copyright 2024 IEEE - All rights reserved. Use of this web site signifies your agreement to the terms and conditions.

• Innovation Economics
• Digital Innovation

Unified Payment Interface (UPI): A Digital Innovation and Its Impact on Financial Inclusion and Economic Development

• Universal Journal of Accounting and Finance 9(3):518-530
• 9(3):518-530

• Symbiosis Institute of Business Management (SIBM Pune)

• Symbiosis International University

• Symbiosis Institute of Business Management pune

Abstract and Figures

Discover the world's research

• 25+ million members
• 160+ million publication pages
• 2.3+ billion citations

• Sumit Kumar

• Pankaj Yadav
• Vaniki Joshi Lohani
• Sakshi Sharma
• Sonia Choudhary

• Vtk Sreevas
• Prasad Kulkarni

• Nabiha Fatima
• Abdul Javed

• Aneta Bobenič Hintošová
• Monika Bačová

• David Leonard
• Abdulaziz Almehrej

• Lawrence Carin
• Victor J. Dzau

• Sophie Guibaud

• Larisa V. Popova
• Tatiana V. Daeva

• Tatiana Chekrygina

• Recruit researchers
• Join for free
• Login Email Tip: Most researchers use their institutional email address as their ResearchGate login Password Forgot password? Keep me logged in Log in or Continue with Google Welcome back! Please log in. Email · Hint Tip: Most researchers use their institutional email address as their ResearchGate login Password Forgot password? Keep me logged in Log in or Continue with Google No account? Sign up

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

UNIFIED PAYMENT INTERFACE (UPI): A STUDY OF PUBLIC PERCEPTION AND ITS IMPACT

2023, IJARW

India is passing through a window of demographic transition, not only is it converting to a cashless economy but it is also witnessing a drastic makeover in the paradigm of banking sector. With a purpose to transform India into a digitally empowered society and knowledge economy, the "The Digital India Programme" was launched by Government of India, "Faceless, paperless, cashless" is one of the professed roles of digital India. Digitalization without financial inclusion was incomplete hence RBI, in August, 2015, issued banking licenses to, 11 payment banks, 2 universal banks and 10 small finance banks. Therefore, the present study determine how mobile payments options are associated with demographic factors thereby providing us with the sections of our society that have adopted cashless payments or have failed to do so. There should be a great impact of the new immerging payment system UPI. The primary data collected through online mode in odisha and used destructive statistics.

Related Papers

International Journal of Case Studies in Business, IT and Education (IJCSBE)

Srinivas Publication , Mahesh Ae

Purpose: The Indian Banking sector is striving hard to popularise digital payments and has gained momentum after demonetization and digital India initiatives. To facilitate digital payments, “National Payment Corporation of India (NPCI)” launched the “Unified Payment Interface (UPI)”, which is an amazing, revamped, and cost-effective breakthrough for enabling digital payment services for all. Proliferation of smartphones, technological innovations, and effective internet communications has signified the usage of mobile payment facility for smartphone users, financial institutions and particularly the banks. To achieve paperless and cashless economy, Unified Payment Interface (UPI) is a potentially innovative way of transferring funds using a virtual payment address established by the National Payment Corporation of India (NPCI). Hence, it is needed to be assessed for its potential to contribute towards achievement of digital economy. Design/Methodology/Approach: This paper is focused on understanding Unified Payment System’s (UPI) growth and its progression in retail digital payment over the years. The study was carried out by exploring secondary data sources and by applying Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis format. Finding/Result: UPI has shown remarkable growth in last couple of years due to customer’s shift towards contactless payments over other methods. Study revealed that the growth of digital payments has increased significantly, especially in the retail payment sector on the UPI platform. Originality value: This study examines UPI's position in the digital payment ecosystem, with an emphasis on identifying UPI's core strengths and growth prospects, as well as areas for future research to investigate India's complete e-payment ecosystem. Paper type: A research case study on Digital Payment Service in India - A Case Study of Unified Payment Interface

SAMRAT BANERJEE

The Digital India program is a distinguished government program undertaken by the Government of India that has an intention of making the country a digital society and a knowledge economy. The slogan and professed role of Digital India is "faceless, paperless and cashless". Different methods of electronic payments are available to promote transactions involving no cash and turn India into a cashless society. These methods include debit/credit cards, Unified Payment Interface (UPI), Aadhaar Enabled Payment System (AEPS), Unstructured Supplementary Service Data (USSD), numerous mobile payment wallets, micro-ATM etc. This study focuses on the attitude, perception of the urban consumers towards various digital payment methods. Responses from 100 respondents of Kolkata have been recorded using purposive sampling method and are analysed using anova.

World Journal of Management and Economics

Sankararaman G

Since 1990, Indian banks have continued to deliver an array of services through various electronic modes such as Automated Teller Machines, digital payments and mobile banking. The Unified Payments Interface (UPI), one of the primary instant real-time payment and settlement system, contributes 48 percent in India's retail clearing and settlement systems. The researchers have made an attempt to study the user's opinion towards different parameters of awareness level, satisfaction level, problems encountered by the users of UPI, and duration to solve the problems. For this purpose, descriptive research design has adopted and 119 samples have collected through structured questionnaire. Convenience sampling technique adopted to collect the samples. Among the 119 respondents, 86 percent of them aware about UPI as a digital payment mode. 31 percent of respondents have chosen the UPI as their first choice among the different digital payment tools. The chi-square analysis revealed that there existed important connotation between age of the respondents and satisfaction level towards the usage of UPI. The results of One-way ANOVA revealed the presence of a momentous transformation among different categories of age cluster of the respondents on frequency of usage of UPI. The researchers have suggested that the regulators have to ensure the cyber security of UPI, and also take necessary measures to increase the adoption of UPI across the nation.

Trans stellar Journals

TJPRC Publication

For a long time, the world has been moving toward all things digital. However, the year 2020 highlighted the urgent need to embrace new technologies as soon as possible. With the implementation of the lockdown, this adaptation happened almost instantly, particularly in India for digital payments. The Indian government has been promoting and propagating online payments sharply, beginning with demonetization back in 2016. 'Digital India' has been the spirit of the many economic and financial decisions that pushed Indians to modify online payments. In a country like India, where disparities are sometimes different, ensuring financial equality becomes a problem of prime importance. This study analyses the usage of Digital Payment Applications and the challenges faced by users. The findings show that1/3 of the respondents in the age group 25-35 have been personally impacted by fraud, data theft, etc. There is a need to create awareness about the precautions to be taken so that the users are not victimized due to fraudulent activities.

Science and culture

Biswajit Bhoi

International Journal of Management, Public Policy and Research

Darshi P Shah

Digital payment is payment without physical exchange of money. Such transactions are done through digital mode in Digital Financial Services industry. Different researchers have studied Various digital payment methods in developed nations but there is a strong research gap for such studies in developing country like India. Research objective for the study is to measure User opinion towards Digital Payment in Rural Gujarat. Study is based on primary research. Data analysis is done using SPSS 26.0. Study provides strong value addition to researchers, academia, industry and society as a whole.

e-journal - First Pan IIT International Management Conference – 2018

Debarshi Mukherjee , Rajesh Chatterjee

Tripura is one of the North Eastern states of India inhabited by 71% rural population and a burgeoning 31% tribal population. The state is skirted by Bangladesh from three sides which suffered due to slow paced industrial development. Further, post 8 th November 2016, the news of demonetization has thrown challenges before the rural population as they lacked awareness and training to deal with the ensuing payment systems alternate to cash transactions. Tripura being dependent on MGNREGA, low per capita income faced difficulty in responding to ambitious Digital India initiative. This study is appropriate in the current scenario and attempts to identify the important factors contributing towards the propagation of cashless transaction system. A massive survey of over 400 households spread in eight districts was conducted across various age groups and income levels in the entire state of Tripura. The ethnic thought process and conservative approach to financial transaction amongst the people of rural blocks and the shadow villages of Tripura have shown their positivity towards accepting the system with security and transparency remained the most significant factor. Using exploratory factor analysis, it was found that youth have adopted online shopping.

Dharmesh K Mishra

The study evaluates India’s technological advancement, which has created a range of opportunities for consumers to enter into digital payment space. Demonetization in India has forced all consumers and companies to embrace and create cashless digital payment platforms. The cashless economy scenario involves various factors for its adoption such as reach, availability and awareness. This study considers factors responsible for adopting new digital payment technologies in India’s different regions across various consumers. The study includes descriptive statistics and variance analysis (ANOVA) to identify elements to achieve maximum satisfaction. The research collects data from 250 respondents living in India, experiencing digital payments and online transactions. The data is collected through a structured questionnaire and critically analyzed using statistical analysis. The data has been analyzed with no sectorial biases and tracked by creating real-time indications. The study uses v...

IAEME Publications

IAEME Publication

The last decade has seen tremendous growth in use of internet and mobile phone in India. Increasing use of internet, mobile penetration and government initiative such as Digital India are acting as catalyst which leads to exponential growth in use of digital payment. Electronics Consumer transaction made at point of sale (POS) for services and products either through internet banking or mobile banking using smart phone or card payment are called as digital payment. The consumer perception of digital payment has a significant and positive impact on adoption of digital payment.

aparna j varma

Digital transactions are taking over most of the transactions in the world and India is no exception. Various studies have proved that efficient payment system will speed up the liquidity flow of an economy. In the era of digitisation, transactions using technology is the best way of being agile and giving better service to consumers. The study is about understanding consumers' perceptions with respect to online and digital payments and safety of these transactions in this world of connected technologies. It is important for marketers to know the perception of consumers towards cashless methods of transactions and this study helps in this. The study is qualitative in nature and uses literature reviews to analyse the concept of digital transactions. The reviews delve insights into the various challenges and advantages of using digital transactions. The findings reveal that digital transactions are accepted in India and usage is increasing year by year. The study finds the advanta...

Loading Preview

Sorry, preview is currently unavailable. You can download the paper by clicking the button above.

RELATED PAPERS

Asian Journal of Research in Banking and Finance

Dr. Venkateswararao Podile

iJOURNALS PUBLICATIONS IJSHRE | IJSRC

International Journal of Current Microbiology and Applied Sciences

manisha ohlan

Journal ijmr.net.in(UGC Approved)

New Horizons

Vijayakumar A B

Pooja Mittal

Journal of emerging technologies and innovative research

kamini shah

Dr. Namrata Nagpal

Management Journal for Advanced Research

suraj sharma

Srinivas Publication

International Journal of Sustainable Development and Planning

Amitabh Patnaik

Research Paper

Jacki o'neill

International Journal of Current Research and Academic Review

Radhakumari Challa

Zenodo (CERN European Organization for Nuclear Research)

Moncy Kuriakose

Shubham Singhania

Theoretical Economics Letters

Reema Khurana

Innovation and Development

Chandralekha Ghosh

International Journal of Applied Marketing and Management

Publishing India Group

Journal of Risk and Financial Management

Ramona Rupeika-Apoga

Journal of Commerce and Accounting Research

International Journal for Research in Applied Science & Engineering Technology (IJRASET)

IJRASET Publication

Interal Res journa Managt Sci Tech

RELATED TOPICS

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024

• Classroom Programme
• Interview Guidance
• Online Programme
• Drishti Store
• My Bookmarks
• My Progress
• Change Password
• From The Editor's Desk
• How To Use The New Website
• Help Centre

Achievers Corner

• Topper's Interview
• About Civil Services
• UPSC Prelims Syllabus
• GS Prelims Strategy
• Prelims Analysis
• GS Paper-I (Year Wise)
• GS Paper-I (Subject Wise)
• CSAT Strategy
• Previous Years Papers
• Practice Quiz
• Weekly Revision MCQs
• 60 Steps To Prelims
• Prelims Refresher Programme 2020

Mains & Interview

• Mains GS Syllabus
• Mains GS Strategy
• Mains Answer Writing Practice
• Essay Strategy
• Fodder For Essay
• Model Essays
• Drishti Essay Competition
• Ethics Strategy
• Ethics Case Studies
• Ethics Discussion
• Ethics Previous Years Q&As
• Papers By Years
• Papers By Subject
• Be MAINS Ready
• Awake Mains Examination 2020
• Interview Strategy
• Interview Guidance Programme

Current Affairs

• Daily News & Editorial
• Daily CA MCQs
• Sansad TV Discussions
• Monthly CA Consolidation
• Monthly Editorial Consolidation
• Monthly MCQ Consolidation

Drishti Specials

• To The Point
• Important Institutions
• Learning Through Maps
• PRS Capsule
• Summary Of Reports
• Gist Of Economic Survey

Study Material

• NCERT Books
• NIOS Study Material
• IGNOU Study Material
• Yojana & Kurukshetra
• Chhatisgarh
• Uttar Pradesh
• Madhya Pradesh

Test Series

• UPSC Prelims Test Series
• UPSC Mains Test Series
• UPPCS Prelims Test Series
• UPPCS Mains Test Series
• BPSC Prelims Test Series
• RAS/RTS Prelims Test Series
• Daily Editorial Analysis
• YouTube PDF Downloads
• Strategy By Toppers
• Ethics - Definition & Concepts
• Mastering Mains Answer Writing
• Places in News
• UPSC Mock Interview
• PCS Mock Interview
• Interview Insights
• Prelims 2019
• Product Promos
• Daily Updates

Make Your Note

UPI Payments: Empowering Users, Challenging Banks

• 24 Jun 2023
• GS Paper - 2
• Government Policies & Interventions
• GS Paper - 3
• IT & Computers

For Prelims: Unified Payments Interface , National Payments Corporation of India

For Mains: Infrastructure challenges associated with UPI

Why in News?

The rapid rise in Unified Payments Interface (UPI) transactions in India has led to the introduction of various daily limits by banks and apps, creating a complex landscape of limitations in terms of value and volume.

• The surge in UPI transactions has revealed the need for continuous development and improvement of banking infrastructure and technological capabilities.

What are the Daily Limits on UPI Payments?

• For instance, ICICI bank allows 10 transactions in 24 hours, while Bank of Baroda and HDFC Bank allow 20 transactions in the same period.
• Certain specific categories of transactions, such as capital markets, collections, insurance, and forward inward remittances, have a higher limit of ₹2 lakh.
• For UPI-based ASBA (Application Supported by Blocked Amount system) IPO and retail direct schemes , the limit for each transaction was increased to ₹5 lakh in December 2021.

What is the National Payments Corporation of India?

• It is an umbrella organisation for all retail payments systems in India.
• It was set up with the guidance and support of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
• To consolidate and integrate the existing multiple systems into a nation-wide uniform and standard business process for all retail payment systems.
• To facilitate an affordable payment mechanism to benefit the common man across the country and propel financial inclusion.

How has the Number of UPI Payments Increased Over Time?

• UPI gained popularity as an alternative to cash after demonetization in India.
• In May 2018, the value of UPI transactions was ₹33,288 crore (₹1,756 per transaction).
• In May 2023, the value rose to Rs.14,89,145 crore (Rs.1,581 per transaction), representing a decrease of Rs.175 per transaction in five years.

Recent developments in UPI ecosystem:

• Introduction of interchange fee for Prepaid Payment Instruments (PPIs) wallet transactions via UPI, applicable from April 2023. The fee is up to 1.1% on merchants for Person to Merchant transactions above ₹2,000 and will be shared between banks involved in the transaction.
• UPI AutoPay feature for recurring payments up to ₹5,000, enhancing customer convenience and merchant retention.
• NPCI has partnered with several countries such as Singapore, UAE, Bhutan and Japan to enable cross-border payments using UPI.

What are the Effects of these Trends for Users and Banks?

• Convenience and Efficiency : Quick and hassle-free digital transactions through smartphones.
• Financial Inclusion: Access to digital payments for individuals.
• Reduced Cash Dependency: Minimizing risks and combating illicit transactions.
• Enhanced Transparency: Tracking and monitoring financial activities.
• Boost to Digital Economy : Promoting digital entrepreneurship and innovation.
• Consumers are increasingly using UPI for smaller transactions, replacing petty cash. The declining value per transaction over time reflects this trend.
• The complex web of limitations set by different apps and banks on UPI transactions creates confusion and restricts users' flexibility in terms of transaction volume and value.
• Users have to navigate through varying limits, impacting their ability to carry out transactions according to their needs.
• The struggle of banks to upgrade their infrastructure and technical systems to keep up with the surge in UPI payments can result in transaction failures. This can frustrate users and hinder their seamless payment experience.
• Banks face difficulties in keeping up with the surge in UPI payments, leading to transaction failures.
• Banks need to ensure that their servers are able to handle the increasing volume and frequency of UPI transactions without any glitches or downtime.
• With the rise in UPI transactions, the risk of cyber threats and fraudulent activities also increases.
• Banks need robust security measures, including encryption, two-factor authentication, and fraud detection mechanisms, to safeguard user data and prevent unauthorized access.

Way Forward

• Invest in robust infrastructure and advanced technology solutions to handle the increasing volume and frequency of UPI transactions.
• DLT is a decentralized digital system that enables secure and transparent recording, storing, and sharing of information across multiple participants in a network to ensure scalability, security, and real-time transaction processing.
• Leverage data analytics and artificial intelligence to provide personalized financial insights to UPI users.
• Offer real-time spending analysis, budgeting tools, and tailored recommendations to empower users in making informed financial decisions.
• Explore the integration of blockchain technology into the UPI infrastructure to enhance transparency, security, and scalability.
• Smart contracts can automate transaction processes, reduce intermediaries, and enable seamless cross-border transactions.
• Harness the power of artificial intelligence and machine learning to detect and prevent fraudulent UPI transactions in real-time.
• Implement advanced anomaly detection algorithms that analyze user behavior patterns and transaction data to identify suspicious activities.

UPSC Civil Services Examination, Previous Year Question (PYQ)

Q1. With reference to digital payments, consider the following statements: (2018)

• BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
• While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.

Which of the statements given above is/are correct?

(a) 1 only  (b) 2 only (c) Both 1 and 2  (d) Neither 1 nor 2

Q2. Which of the following is a most likely consequence of implementing the ‘Unified Payments Interface (UPI)’? (2017)

(a) Mobile wallets will not be necessary for online payments. (b) Digital currency will totally replace the physical currency in about two decades. (c) FDI inflows will drastically increase. (d) Direct transfer of subsidies to poor people will become very effective.

Q3. Consider the following statements: (2017)

• National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country.
• NPCI has launched RuPay, a card payment scheme.

(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2